By Pete Engler
For most small to medium businesses (SMBs) the continuous search for new customers is essential to meet or exceed growth targets. As a reseller, the extent of available prospecting options for your business is often influenced by the size of the organization, and whether there are dedicated resources for lead generation and new customer acquisition. Larger organizations typically have the human capital and the budget to invest in a multitude of avenues for finding new customers. Regardless of company size, one factor is particularly applicable to all organizations. It’s extremely important for any business owner to understand and properly manage customer acquisition costs. For example, it is less expensive to keep existing customers as a means to maintain current or incremental levels of revenue, but acquiring new customers is imperative if you want to achieve significant growth. When it comes to finding prospects (and customers) that are ready and willing to purchase, there are many options available, with varying costs and impact on your customer acquisition cost. Let’s take a look at some of them.
It is crucial to balance customer retention and prospecting for new customers, but it’s often a no-brainer to start by focusing on retention. As a source of revenue, returning customers should be the least costly (and easiest) form of maintaining and possibly growing revenue. In SaaS models, retention is key, of course. But for any type of business, such as resellers who focus on managed services, the sales process for adding on additional products and services is often met with less resistance. The customer has already purchased at least once and research proves their experience with a business will determine if they return. Great products and excellent customer service, during and after the sale, are paramount to the customer experience. Statistics show that 80 percent of your company’s future revenue will be derived from 20 percent of existing customers.Compare that to the statistic that indicates the cost of attracting new customers is five times more than keeping an existing customer.
As previously mentioned, you still need new customer growth. Let’s take a look at a few examples that will lead to new customer acquisition.
Word of mouth/referrals/reputation: If you are doing a good job with retention efforts, then referrals from existing customers could be the least expensive option for new customer recruitment. Referrals require little effort if you have a strong history of quality product/service offerings, and solid reputation for solution implementation, and excellent customer service. According to a Q1 2014 report from Gallup and Wells Fargo, it was determined that attracting customers, targeting business opportunities and finding work or new business was the top challenge among U.S. small business owners. The same study concluded that 36 percent of owners stated word of mouth is the best source of revenue, after returning customers (which logged in at 44 percent). There are standalone solutions that help you develop, promote and manage a more complex referral system. But small businesses looking for a simple route can promote referral opportunities on your website, in email campaigns, or by just picking the phone and making the ask. (Note that referral programs are usually more successful if your existing customer is rewarded with some incentive, such as a future discount or cash.)
Social media: A more recent prospecting tool available to savvy resellers is the use of social media, sometimes referred to as social selling. If done correctly, it can have a huge effect on spreading the word about your business and in actual lead generation. Just over a year ago, CMO.com reported that 54 percent of business-to-business (B2B) marketers said they have generated leads from social media. With the rapid rise of business-specific social media activities and the increasing audience acceptance of the approach, that number is sure to grow considerably. In addition to the traditional social media sites, there are online communities and topic-specific groups (such as LinkedIn Groups) that provide incredible access to your target audiences. Participating in these social communities can be another valuable asset for reaching buyers. One example of a popular tech community is Spiceworks, which focuses on information technology professionals, and has more than 6 million members. Tech vendors have pay-to-play options available to them, such as sponsoring a topic, placing low-cost ads, and sponsoring webinars via the community. Even if you choose not to put lead gen dollars to these paid options, it is still a good (no cost) avenue for finding and conversing with potential prospects and demonstrating your knowledge as an expert in your field.
Your local Chamber of Commerce: Another time-tested avenue for promoting your business is participating in or sponsoring local events. The first step is to join and become active in your local Chamber of Commerce. Many prospects will use the Chamber to network with other members for peer referrals in an effort to validate a business’ integrity. Many local chambers hold networking events, host committees you can volunteer on and have other events that provide great opportunities to meet and greet your future prospects. Chamber-related events will require a bit more time and effort but the more involved a business is, the more fruitful the outcome can be with finding prospects.
List purchase services: If you have trouble building your own list of prospects, a proven method for finding potential prospects is to buy targeted lists that match your ideal customer profile. There are many agencies that provide such services and the lists can usually be filtered and regionalized with great effect. There are several methods of marketing activities that can be implemented with these lists from email campaigns, cold calling and traditional card or brochure mailers. Obviously, these prospects are very cold and may or may not be currently seeking the solution you offer. While the effectiveness of the activities vary, pre-purchased lists (price typically based on the number of contacts you buy) can provide a significant return on investment. The quality of the vendor and their lists should be researched and validated.
Trade shows and conferences: Whether regional or national, trade shows can still be an effective method for evangelizing your products and services to a large audience. Participation can range from only having a booth for displaying products and services to participating in the additional sponsored events or speaking opportunities offered. Participating in trade shows can end up being one of the most expensive and time consuming activities, but it does allow you face-to-face interaction with potential prospects. Ensuring you have seasoned employees available for the event, especially with some shows being multi-day events, is imperative and may be a trade-off that isn’t worth the effort depending on your staffing level.
As you see, the approach to new customer prospecting can take a multitude of directions, and involve a wide range of time and money required. If you have available budget, you may also to choose to hire third-party marketing firms to assist with prospecting activities, from campaign development to managing online pay-per-click programs (such as Google AdWords). The comfort level lies solely on business stakeholders and their willingness to be involved in prospecting.
Pete Engler is the channel marketing manager at Digium, a business communications company based in Huntsville, Ala., that delivers enterprise-class Unified Communications.