Customer acquisition via personalized marketing allows you to find prospects and transition them from not engaged, to actively engaged in a personally identifiable and human-like way. Any marketing organization knows that transition process is activated through smart audience targeting, and hyper-targeted personalization. Viable prospects are those with desirable characteristics, namely:
- Responsive: have a likelihood to respond or buy your goods and services (“conversion”)
- Profitable: will have a high value once acquired
Focusing on reaching these targets makes your efforts efficient, and maximizes ROI. Guiding principle being: the less targeted the communication, the smaller the ROI potential.
Certainly, we’ve come a long way from the database marketing days of the 1980s where direct marketing lists ruled the roost. Remember those purchased or rented lists of names, addresses and phone numbers? With the boom in internet adoption came coveted email addresses. Now, of course, customers give information away in their everyday activities in an effort to better the experience for themselves. Today’s targeting involves much savvier, digitally-intensive technology such as cookies, digital breadcrumbs and ad audiences via third party networks plus a mass of delivery platforms encompassing all our gadgets and apps like computers, smartphones, smart TVs, voice assistants and chatbots. As the internet of things extends its connections into our lives, rich streaming data will enable even greater targeting and personalization.
Along with traditional media (TV, direct mail, outdoor, etc.), the explosion of digital prospecting channels and precision targeting might lead one to believe we’re in the heyday of customer acquisition. Not so fast. There are major head-winds decreasing the effectiveness of customer acquisition marketing.
Consider the following inputs:
Now consider the implications these elements may have on your marketing efforts.
- Increasing Digital Competition: More companies are becoming digitally savvy, so there’s actually very little differentiation among competent competitors in terms of their acquisition digital campaigns. (The true digital laggards are being weeded out.) The tightening of the market not only increases costs but also leads to “continuous promos” and other deleterious strategies to maintain the new customer flow.
- Privacy Concerns: Consumers are also becoming wary and cynical about those sweeping TOCs that authorize data over-sharing with “valued partners” and have huge loopholes “for future enhancements.” They worry about what they’re agreeing to, and the consequences of clicking on ads, emails and agreements. They even worry about whether Alexa is listening all the time (of course it is; and thanks for sharing your audio for future product enhancements).
- Anti-Tracking Tech: Anti-tracking technologies are becoming more widespread, such as ad blockers, VPNs and privacy-focused browsers. Security concerns and encryption are closely related to these developments.
- New Channels Adding Scale & Costs: As new channels emerge (e.g., programmatic TV), there’s a race to use them… but oftentimes they lack scale and the costs (production, delivery) are too high. And marketer competence in using them (once they become mature) is quickly matched by fast followers. The first mover advantage is short.
- Tightening Walled Gardens: The major digital walled gardens (Facebook, Google, Amazon and Apple) are tightening and limiting targeting in response to public opinion and government pressure/regulations.
- Regulations: There are more requirements around consent, tracking and sharing limitations, transparency, fairness and non-bias and in general reining in the wild west of digital capture and uses.
So, where does that leave marketers in terms of digital customer acquisition and targeting? In a continual arms race of new channels, which are quickly and increasingly commoditized and shrinking prospects for precision targeting. (Witness the struggle of companies whose business models are vulnerable to the six considerations above.) In other words, a more difficult competitive environment, as well as weaker and fragmented targeting, foreshadows a rough time ahead. What can be done?
Become a fast follower of new channels, technologies and capabilities. This approach will permit you to master new technology quickly with low costs – at least for a bit of time. Learning and agility must be baked into your culture and organizational process in order to thrive in the evolving customer acquisition ecosystem and tech stack.
Second, as the digital era gives us more measurable and effective tools for acquiring new customers, companies cannot lose sight of their core. Companies need to strengthen their product and service performance, pricing, customer service and experience and of course reputation. And that means listening to consumers, understanding them and watching for emerging trends. Companies must invest in customer-centricity and extending that to prospect-centricity. The principle, in turn, focuses on first party data, the data you own that the customer voluntarily gave to you. First party data spans sales and transaction data of course, but it’s also interaction data like website logins and visits, email opens and click-thrus, call center and kiosk activity; and other means of gathering the voice of the customer through methods like social listening and social intelligence, etc.
I believe there is going to be a turbulent period in customer acquisition and targeting. The key to survival and competitive advantage will be agility, learning and partnering with companies or agencies which excel at evolving quickly. The question many businesses should ask themselves (and their partners) is: What is the process you go through to monitor, test and exploit new marketing acquisition channels? And then they should ask: How can we maintain a focus on our customers through our products, pricing and experience? If those two areas can be mastered, then customer acquisition via targeted marketing will be that much more successful.