Climbing Up the Customer Acquisition Funnel

We’ve been enjoying reading the CohereOne blog. Here’s a post from Allen Abbott of CohereOne. Allen recently joined us in the Cat-U Pub to talk about this same topic. Here’s the link if you’d like to see the video. We’ll keep the video free until 4/20/2015. We hope this gets your marketing juices moving!

The nature of direct marketing has generally lent itself to acquiring customers at the bottom of the sales funnel. First targeted list rental, and then cooperative databases, allowed us to focus our marketing dollars on consumers who were “ready to purchase.” Our reliance on paid search continued that tendency in the digital space. Although this approach may still work for high frequency, low ticket products, many of us are finding that acquiring significant numbers of new customers who are in “purchase ready” mode gets more difficult each year. Rising mailing costs, shrinking universes of prospect names, and the maturation of online programs are all working against the strategies that worked for us for so many years.

To use one of my favorite analogies, we have been fishing in a well-stocked pond, and that pond is now “fished out.” Continued growth will require us to leave the pond and move to a good sized lake, where the fish are more plentiful, but “the keepers” are mixed in with a large number of fish that we will have to “throw back.” In more conventional terms, we must move some of our prospecting activities higher up the sales funnel, and utilize the often abundant digital behavior of “suspects” to develop effective downstream marketing programs to identify the “keepers” and “throw back” the small fry before we spend much on them.

As we shift marketing dollars to this strategy, we also must remember that we are still direct marketers. We have to identify and bring in “suspects” in a way that allows us to measure both the cost and the ROI of these new marketing activities. There are a variety of strategies that allow us to move up the funnel, but I will focus on two that I particularly like:

  • Develop a “trial” program that offers consumers a lower priced product at a significant discount. Omaha Steaks has employed this strategy for many years, bundling steaks and hamburgers into a package at a very attractive price point. Paul Fredrick has also successfully employed this strategy, offering a 100% cotton white dress shirt for under $20. Both companies have then developed follow on marketing programs to convert these “triers” to full price buyers.
  • Offer consumers something of value in return for their land or email address. Companies selling very high ticket products sometimes offer fabric samples to compile a list of “suspects” for future marketing activities. Other businesses use contests or content offers to build email subscriber lists, and then use reverse append services to acquire land addresses, or triggered email series to digitally target those names (if you use a contest, the prize should be something directly connected to your products and services, to assure that the email addresses you collect are qualified).

Although the average value of these “triers” or “inquirers” is lower than that of a customer acquired through a prospecting catalog or paid search, there are future loyal customers mixed in with a good number of low or no value consumers. Determining the lifetime value of customers acquired “up the funnel” is essential in calculating how much you are willing to spend to acquire a “trier” or a land or email address. The math is very different, but still an integral part of managing these activities. And understanding the digital browsing behavior of these folks allows us to design and develop more effective downstream marketing strategies to convert them.

I encourage everyone to think boldly about how to climb the customer acquisition funnel. If you would like to chat further about this approach, please contact me at