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By Justin Zohn

 

Corporate executives are facing hard decisions.  Profitability concerns are pressuring budgets across the board, including sales and marketing.  Yet, what could be  

more important during tough economic times than funding initiatives to acquire new customers?

The underlying issue is customer acquisition cost.  Drive this cost down and your marketing and sales budgets will yield more customers.  This requires using the most effective resource at each marketing and sales stage, and then enabling your processes with supporting technology.

Channel marketers gain additional benefits by including outlets, dealers, distributors, and franchisees in their marketing and sales programs.  Begin by determining your cost of acquiring new accounts using the same resource throughout the marketing and sales process.  The chart and table below show examples of these costs and their respective cost per solicitation.1,2 

Quantify Your Existing Acquisition Cost

Next, examine each marketing and sales activity, from acquisition to retention, to determine where a less expensive resource can replace a more expensive one.  There are many ways of redesigning the sales process.  One recent study of a client's sales organization found that a typical sales rep spent 45% of his time selling, 40% on lead qualification activities, and 15% on administrative activities.  In this case, adding telemarketing to supplement personal selling directly lowers the cost of acquiring small accounts.  Larger buyers, who can't be closed over the phone, are turned over to sales reps and channel partners as qualified leads, increasing productivity and reducing the cost of acquiring large accounts.

Activity

Cost per New Customer

Cost per Solicitation

Personal selling

$500

$100.00

Direct mail

$115

$1.50

Telemarketing

$95

$3.30

Website, e-mail

$30

$0.06

Buyers purchase when a need arises, or when they perceive they are getting a "good deal."  Marketing and sales processes must span these peaks and valleys, create a preferred supplier position, and maintain top-of-mind awareness.  Sales follow-up is key.

Reduce Cost Through E-Mail and Internet Marketing

When e-mail addresses are collected by sales reps and channel partners during the sales process, the addition of permission-based e-mail campaigns reduce the cost of sales follow-up.  Informational e-mail campaigns address buyer needs, while at the same time highlighting features and benefits of your offering.  Promotional e-mail campaigns containing hyperlinks to offerings on your website attract new customers.  Providing sales support to channel partners as well as sales reps is practical due to the low cost of e-mail marketing.

Once marketing and sales processes are defined, a support system can be selected.  Internet solutions are preferred over client-server applications due to their relative low cost and ease of use.  In addition, the system should be tightly focused on managing channel marketing and sales processes in order to minimize training and technical support costs.  Effective collaboration with channel partners demands simplicity and broad access, two attributes of Internet-based technology.

If you have not calculated your customer acquisition cost, how can you quantify the savings of a lower cost marketing and sales approach and determine your system support requirements?  Click here for a step-by-step implementation guide.


[1] Costs are based upon typical industry averages.  Response rates are implied.

[2] Actual costs vary from business to business depending on the complexity of the sales process.

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