SUMMARY

Many small businesses rely on Facebook, Instagram, and word-of-mouth to generate new customers. These are rarely enough. Instead, business owners should consider the many under-utilised, but effective, marketing channels available to them.

We share our own experiences of using a range of different marketing channels — and prospect sources — to acquire new customers. What worked, what didn’t, and how the idea of “intent-to-purchase” can be used to select the right channel.

What channels are right for you? Read our 10 recommendations at the end.

We’re going to look at two things here:

• Firstly, prospect sources;
• Secondly, marketing channels.

We’re also going to cover the concept of “intent-to-purchase” and show how this can help guide acquisition choices.

Across the span of several years, there were five sources that consistently performed well for customer acquisition. In order, these were:

1. Prospects who had requested a brochure, either via the website or a store (but especially via the website);
2. Customers who had registered for extended product cover but had purchased through a store and not previously left their contact details; these were a great source to convert into “direct” customers rather than store customers, for increased margin for the business;
3. People who had entered a prize draw to win a free gift (that is, a prize draw run by us and not a 3rd party);
4. Customers who had purchased via a reseller and had left their details to register for extended product cover;
5. Lastly, “cold” prospects who had never heard of us, but were sourced via a “data cooperative” organisation, The Abacus Alliance. This is a group of retailers and e-commerce brands that would essentially pool their transactional data together, and the cooperative would make the data available for other members to rent for their own direct mail marketing.

How “intent-to-purchase” can help predict your best responses

Have a look at that list above again — it runs from a high intent-to-purchase to a low intent-to-purchase. Unsurprisingly, the response rates reflected that.

That is, the higher the intent to purchase, the higher the response rate. This resulted in highly efficient marketing spend. This was ideal for cash flow.

Thinking of “intent-to-purchase” can help predict which prospect source is going to give you the quickest return. It can be wise to start with these sources first and start small. Once you have a channel consistently showing a positive return, you can add another channel to your acquisition efforts.

Have a think about what might be your highest intent-to-purchase sources of prospects. They may be one or more of the following:

• Previous customers who haven’t purchased in while;
• Previous enquirers;
• Prospects who have visited your website or are connected to your social media;
• Prospects who have placed something in their online basket, but did not complete their purchase;
• People who entered a competition or prize draw of yours.

Top performing marketing channels for customer acquisition, in our experience

TV advertising

For us, TV advertising was the best channel for customer acquisition. TV gave us a very broad reach across the target audience, an instant impact (which we could see using the real-time report in Google Analytics), and an emotive creative.

We aired the campaign during the peak buying season to maximise the impact and then chose the time of day the ads should air (using a mix of daytime and evening spots). We then built other marketing activities around the advert.

Gone are the days when the expense of TV campaigns is eye-watering. With Sky AdSmart and regional options like Local TV, you can advertise for £3,000, making TV advertising within reach for smaller businesses who’ve set budget aside.

Google and Bing paid search advertising (“PPC”), using brand and product terms

Paid search advertising on Google and Bing was a year-round strong channel for efficient customer acquisition spend. This was because:

• Those searching for our brand and product terms had a high intent-to-purchase, and these were the keywords we focused on;
• Google gave us favourable rates as we were the best match for the brand and product search terms (obviously);
• We had resellers and competitors bidding on our brand and product terms, so this meant our organic listings were otherwise way down the page.

We questioned whether we needed to run these ads, so we ran an on/off test for some months to measure how much incremental revenue we gained or lost. The test showed that we were losing money every time the ads were off.

Don’t forget about Bing, even if you don’t use it yourself. For sure, the performance on Bing will probably be dwarfed by Google if you try both (about 90% in favour of Google, to Bing’s 10%). But in our experience, it has been an efficient way to gain customers as the bid prices were lower, probably due to less competition on the platform. And why turn away good money? It all helped.

Direct mail and door-to-door drops

This is a really under-used channel, especially by small businesses.

In our experience, direct mail was a very effective tool for acquisition. It helped achieve broad reach in a very controlled and measurable way.

The rationale for moving away from postal mail appears reasonable: “why spend the kind of money direct mail needs when consumers are increasingly using their phones for information and commerce?”

However, the fact that we’re all getting less mail through the door presents an opportunity for businesses to create an impact, and stand apart from competitors. After all, we still live in houses and pick up our mail when it arrives.

Direct mail provides the ability to target by geo-demographics, such as location, or socio-economic group. Also, responses can be measured accurately, as can purchase patterns over a long period of time. You can test different creative treatments and formats, and measure the results before committing to a larger campaign.

More small businesses should consider direct mail to reach their target audience. Yes, direct mail requires more work and spend, but if you start small and build on your efforts over time, it can turn into a very effective tool.

Email

Another powerful tool for acquisition. And like direct mail, it can be a highly targeted and measurable channel — and one often ignored by small businesses.

You need a database for email marketing and you’ll need to comply with data protection laws, but with forward-planning you can turn email into a valuable channel.

It takes time, but a year from now, you may be glad you took the steps now.

“Retargeting” online advertising

“Retargeting” ads can be served to previous visitors to your website when they are on other websites, using services such as Criteo, AdRoll, Google, or Facebook. These ads encourage visitors to come back to your site.

If you have a product-based website, you can set the ads to show the products the visitor previously viewed, to ensure the adverts are relevant to them. This results in a higher response rate.

Some people the ads as annoying, but they’re undoubtedly effective for many retailers, and this was our experience too. Retailers are willing to take this hit in return for the extra business they gain. All for very little day-to-day maintenance, once set-up.

Abandoned basket ads and emails

Another hard-working and largely-automated channel that is popular amongst retailers are ads and emails to website visitors who have left something in their online basket. It was a tactic that continually worked really well for us.

You’ve seen these ads and emails: if you leave something in your basket and go onto another site, you’ll get a reminder at some point, and maybe an offer too, such as 10% off. Again, another one that needs little day-to-day maintenance once it’s been set up.

What approach to acquisition is right for you? Here’s our 10 recommendations to small businesses

Firstly, the only way to really answer this question is: it depends on what you find in your research and what strategy comes out of that. As we’ve said, strategy comes before any decision on acquisition channels. Strategy will make sure you point yourself in the right direction.

Since there’s no one set of answers that’s suitable for all businesses, we can instead use a framework to guide us. The following set of ideas will apply to most businesses:

1. Identify your highest intent-to-purchase prospect sources and target these first. These prospects will be your easiest route to gaining new customers and will keep your spend as efficient as possible. You can move to the broader-reach media later;
2. Think big, but start small. It’s important to think about the long-term for customer acquisition but start small. Test and see what happens before committing to larger spends. Volume discounts from suppliers and economies-of-scale will come later;
3. Move towards the broader-reach media over time. The end destination you’re aiming at is one where you have a range of small and highly-efficient acquisition channels, and then one (maybe two) broad-reach media on top. By the time you reach the broad-reach media, you should have built a budget from earlier acquisition efforts;
4. Be clear about how you will measure your efforts before you run anything. At the end of a campaign, you need to know what breakeven and success both look like. We’ve seen campaigns that were doomed from the outset because there was no way to measure the impact. At a minimum, ask your new enquirers and customers, “How did you hear about us?”;
5. Facebook, Instagram, and word-of-mouth are unlikely to be enough to meet your acquisition needs. You’re going to probably need more;
6. Introduce one new campaign or channel at a time. You will be able to isolate the effect and then make adjustments with more confidence. Once you’ve gained confidence with a channel, then add another;
7. Set budget aside for future acquisition marketing, and be disciplined about it. Even if it’s just a small amount each month. For most businesses, acquisition is an unavoidable necessity for long-term growth;
8. Don’t write off broader-reach media, such as direct mail, radio, outdoor advertising or even targeted TV;
9. Not everything you try will work. You will lose money on some activities you try, but the lessons you gain will be valuable. As we said, start small to reduce your risk;
10. Be prepared to adjust along the way. You need to “observe and iterate” frequently, especially in the early days. As a small business, you have the advantage over a large business as they need more time to make any changes. You don’t. Use it to your advantage.

We’ve spoken to businesses who have static or declining customer numbers and have drifted to the point of doing the bare minimum in terms of acquisition marketing. If you need help, advice or simply want to share experiences, reach out to us. You can also catch us on Facebook.