Akash C.Mathapati

Managing Customer Acquisition

Akash C.Mathapati

Akash C.Mathapati

Definition• The acquisition transaction perspective

says that customer acquisition ends with a customer’s first purchase

• It includes the 1st purchase as well as other non-purchase encounters that both precede and follow the purchase, up until the time the customer makes a repeat purchase

• Once a 1st purchase is made, a customer may request service or other activities that impose further costs, this is part of CA.

Akash C.Mathapati

Which firms should Emphasize Acquisition Firms need to direct some attention towards

CA Optimal amount of the effort depends on a

businesses ability to retain customers, its customers repurchase frequency & its relative opportunity to acquire Vs. retain customers

CA firms in new/ undeveloped markets in order to generate awareness and penetration of their products

Akash C.Mathapati

Developing a Customer Acquisition Strategy Pursuit of market share has driven the CA

investment of the majority of companies Attitude has been to acquire as many

customers as possible E.g., AOL

Few companies opt for selective CA policies It assumes that not every potential customer is worth

the CA investment

Akash C.Mathapati

The ACTMAN ModelThe ACTMAN: Acquisition Tactical Management6 elements:

1. Targeting2. Awareness generation and product positioning3. Acquisition pricing4. Trial5. Usage experience and satisfaction6. Post-introductory pricing and the creation of

long-term value for the product or service

Akash C.Mathapati

The ACTMAN Model

Targeting

Positioning

Awareness

Product/ service

expectations

Product/ service

experience Satisfaction

Repeat purchasingTrial Value

introductory pricing

Price Price expectations

Akash C.Mathapati

TARGETING1st degree - Individual Customer Targeting (profiling)2nd degree – Segment Targeting3rd degree – Self-Selection Targeting

AWARENESS GENERATIONDirect MARCOM 1st degreeMass communication 2nd & 3rd degree

Positioning is the act of designing the company’s offering and image so that they occupy a meaningful and distinct competitive position in the target customers’ minds

Akash C.Mathapati

Acquisition Pricing Introductory prices should decline as a

segments max retention potential goes up Introductory prices should be higher for price

sensitive groups over time Special category of CA is reacquisition of

lapsed or lost customers Firms can set “winback” prices that are below

offered to other acquisition targets

Akash C.Mathapati

Trial If product expectations are very high as a

result of initial selling communications, and if the product fails to meet these expectations, the customer probably will not repeat-purchase, and the lifetime value of that customer will likely be low or even negative

Akash C.Mathapati

Usage experience and satisfaction- Product design and the provision of

specified benefits- Post-purchase servicing of the customer

Akash C.Mathapati

Customer Acquisition Metrics No of customers acquired, track & match to

co’s acquisition goals Acquisition rate – acquired customers to

targeted prospects Cost of acquiring a customer etc

Akash C.Mathapati

Conclusion Managing acquisition strategies & tactics is vital

to creating, sustaining, enhancing customer equity

The ACTMAN model has long-term implications for the customer-firm relationship

Any acquisition strategy that fails to consider its long-term effects on retention and add-on selling is incomplete