“I never respond to Junk mail; I just throw it in the bin”.
“If people knock on my door trying to sell me anything, I just shut the door on them”.
“When people phone me up selling things, I just put the phone down”.
How many times have you heard comments like these? Indeed, how many times have you made comments like these? And yet there are lots of businesses in the UK that rely heavily on direct mail, door to door distribution, telesales and door to door canvassing. These businesses collectively spend huge sums of money on activities of this type; and, if they didn’t work, it’s reasonable to assume that the companies involved wouldn’t invest in them. So how can we reconcile the perceptions of most consumers with the experience of many B2C businesses?
The simple answer is that, it’s all about appropriateness and timing. Let me give you an example. A close neighbour of mine retired a couple of years ago as CEO of a reasonably substantial business. He and his wife have decided that they want a new kitchen; and he was talking to me about it. Whilst they had the money in the bank, ready and waiting, they were busy with family and other things and just hadn’t found time to start researching the local market for an appropriate supplier/installer. And he said that, “if any kitchen company knocked on his door or phoned him, he’d almost certainly, at least, give them a fair hearing”. This is a man who normally never buys from door to door or telephone sales people and who is very adept at saying no to them. But despite that, in these particular circumstances, a direct approach would actually be welcome because he and his wife are in the market.
Lead generation isn’t primarily about creating markets or developing brands; it’s about generating enquiries from people, who are already predisposed to buy. It’s about getting the right product/service offer in front of the right people, in the right place, at the right time. Get all of that right and you’ll sell; get it wrong and it’s much more difficult.
Lead generation invariably means some sort of unsolicited sales approach and, if this is undertaken in a random, untargeted way, it can have a very damaging effect on the brand and its brand values. A few years ago, I was involved in some market research, for a client, who relied heavily on random, untargeted lead generation activities, on a large scale. And we discovered that for every customer gained through these unsolicited sales approaches, three other people, who could have been potential customers, in the future, were alienated. It became clear that whilst this company was successfully exploiting the market in the short term, it was undermining its brand for the longer term. And sure enough, as the market became increasingly alienated, the business started to lose market share; sales went into decline and eventually the business went into administration.
The problem with many unsolicited sales approaches is that they tend to be very poorly targeted; so most recipients of them aren’t like my neighbour; they’re just not in the market, for that product/service, at that time. As a result, they tend to see the approach as intrusive and can often feel threatened by it; so they develop a very negative view of the brand and/or the business.
Obviously few businesses, selling into B2C markets, can guarantee to target only those people that are in the market; that’s neither practical nor possible. But the more you can target your lead generation towards people that are in the market for your type of product/service, the more cost effective it will be. Conversely, the less you target, the more damage you will do to your brand and the less cost effective your lead generation will be.
I’d now like to turn to a third aspect of targeting, namely the profile of the prospect, who will be most likely to buy from you. Even if you offer the right product/service at the right time, you may still have a fight on your hands if your brand values don’t gel with the aspirations of your prospect.
Much of this is subliminal; but it’s still very real. Different types of people will tend to buy similar products/services from different types of businesses.
Some buyers are looking for premium brands; some for budget brands; and some for value brands. Some people place local suppliers above national; some the reverse. Price, specification, delivery period, quality, local reputation, image, length of time in business, knowledge and experience plus many other factors influence different people in different ways in their selection of a product/service. And this is why the customers of one supplier of a product/service may have an entirely different profile from that of another business, supplying a similar product/service. And if the first business tries to sell to prospects, whose profile is similar to that of the second business, it will find it much tougher to win sales; conversion rates will be much lower and selling costs will be much higher. Think about Marks & Spencer v Primark: Asda v Waitrose: Everest v the local window company: Magnet v the Alno kitchen studio. Different people shop in different ways for broadly the same thing.
To summarise all this so far, B2C businesses need to target the right profile of customer with the right product/service, in the right place at the right time. The closer you get to this, the more sales you’ll achieve; the more you’ll strengthen your brand position; and the lower your selling costs will be. The further away from this you stray, the lower your sales will be; the more you will undermine your brand; and the higher your selling costs will be. So the $64,000 question is, “how can you get your targeting right”? So I’ll try and give you some pointers.
The first thing to focus on is your existing customer base. These are people who have bought from you already; so they’ve accepted your product/service, your brand values etc. and by definition, these are the type of people that will buy from you or your business because they’ve already done so.
They are, therefore, likely to be warm to approaches for additional sales; additions or enhancements to what they have already bought; upgrades; linked sales; replacements of old models etc. And this should result in low lead generation costs, high conversion rates and good margins. But for this to be effective, you need an appropriate Customer Relationship Management (CRM) System to support the effective control of the process. I can’t stress how important this is and I’m regularly surprised by the number of B2C businesses that either don’t have one or have one but don’t use it effectively.
A good CRM system provides a full audit trail of the entire interface between the business and the customer, including contact details, a record of what the customer has purchased, when he/she purchased, the price paid, issues/complaints that may have arisen, how these were resolved etc. It should also record selling opportunities for the future. For example if you’ve supplied and installed replacement windows, there may be doors that have not yet been replaced or an opportunity for a conservatory. If you’re installing central heating or a new boiler, there’s an opportunity for a service contract. If you supply kitchens and bathrooms and you’ve fitted a kitchen, there may be an opportunity for a bathroom. These are just a few examples, within the home improvement sector; but most B2C businesses will have similar opportunities to record on the system. Add to this, records of conversations with customers and you have some really good information, which you can use.
If you have a CRM system full of the type of information I’ve described, you can start making direct approaches (subject to appropriate approvals for TPS, MPS etc.) to your customers with product/service offers that are both timely and relevant; and if they are timely and relevant, you have a much greater chance of a good response than if they are not. In effect, you will be developing strategies for individual customers rather than a “one size fits all approach”. In a very much more sophisticated way, this is what Tesco does with its Clubcard and the promotions it develops from it.
Still focussing on your customer base, the next step is to generate new customers from your existing ones. Most of your customers will have friends, relatives and neighbours that are similar to them; similar circumstances and similar values. So a higher proportion, of these people, is likely to look favourably on your products/services and brand than is an entirely random group of people elsewhere. So, once again, you’ll find them easier and cheaper to sell to than people, to whom you are entirely unknown.
There are really two things you should do.
The first is to have a good recommendation scheme with an appropriate reward for every customer that makes a successful recommendation and an incentive to the prospect that the customer is recommending. This means that both the customer recommending and the prospect are incentivised. Once again, this has to be properly managed on the CRM system and effectively promoted to your customer network. It should all be date driven with triggers for each part of the process so that every customer receives the correct details at a predetermined time and frequency. Good well managed recommendation schemes can be a highly effective way of generating new customers very cost effectively.
The second is to promote your products/services in the neighbourhood of your customer, shortly after that customer has completed his/her purchase. A variety of media can be used, depending on the type of product/service involved. It could be anything from knocking on neighbours’ doors to leafleting or direct mail. But the main point is that these people are more likely to have similar profiles to those of your customer than would be the case with a random group. And whilst the response may not be as strong or positive as it would be with recommendation schemes, it is likely to be stronger and more positive than would be the case with a random group.
We’ve looked at additional sales to existing customers and developing new customers from existing customers. But now we now need to consider how to target entirely new customers that don’t fall into either of these groups.
The key lies in understanding the detailed profile of the type of people that are most inclined to buy from your type of business and then identifying where they live.
Consumer profiling has become a very sophisticated process. And there are some very effective profiling tools on the market. However, rather than discuss these products in general terms, I’m going to concentrate on one particular product called ACORN. But when reading about ACORN, you should bear in mind that there are other similar types of products, some of which are even more sophisticated and some sector specific. However ACORN is a very useful product that is applicable to most B2C businesses; and it is the brainchild of a company called CACI.
So what is ACORN?
ACORN is a geodemographic segmentation of the UK’s population which segments small neighbourhoods, postcodes, or consumer households into 6 categories, 18 groups and 62 types.
ACORN provides understanding of the people who interact with your organisation. It helps you learn the who, what, where, when, how, and why of their relationship with you.
This can help you to target, acquire, manage and develop profitable relationships and improve business results. The classification also gives a better understanding of places and the people who use them.
Who uses ACORN?
Retailers, financial organisations, and over 200 public sector organisations use CACI data to provide an accurate picture of the needs of their customers and local communities.
ACORN is used to understand customers’ lifestyle, behaviour and attitudes, or the needs of neighbourhoods and people’s public service needs. It is used to analyse customers, identify profitable prospects, evaluate local markets and focus on the specific needs of each local community.
You can learn more about your customers’ behaviour and identify prospects who most resemble your best customers by adding ACORN codes to a customer database.
Such an understanding of the ACORN characteristics of a market can also be used to drive effective customer communication strategies.
CACI Ltd is the company that has developed Acorn and it describes itself as follows:-
CACI was founded in 1975 in the UK and operates from several offices across the country.
Headquartered in London, CACI Ltd is a wholly owned subsidiary of CACI International Inc. CACI International Inc. is a publicly listed company on the NYSE with annual revenues in excess of US $3.8bn and approx 14,000 people worldwide.
CACI offers an unrivalled range of marketing solutions and information systems to local and central government and to businesses from most industry sectors.
The ACORN User Guide provides a detailed description of ACORN and gives a full description of the lifestyles and values of each of the 56 ACORN types. You can view and print the “ACORN User Guide” by following link below: –
ACORN User Guide
The first step for most B2C businesses is to profile their existing customer base using ACORN. Each customer record will be tagged with its ACORN type and the entire customer database can then be compared with the base population. From this you will see the ACORN types, with which your business does very well and those, with which it scores less well. Typically most businesses score highly with a few ACORN types – perhaps five or six – and then moderately well with another five to ten groups. Thereafter the scores tend to fall away.
The high scoring ACORN types are those, whose lifestyles, life stages, incomes, values etc. gel with the brand values of your business. These are the people most likely to respond to your promotions and the most likely to buy from you. Apart from existing customers and customer related prospects, these people represent the most cost effective target group for your business. As you move further away from these key ACORN types towards ACORN types that are less well disposed to your brand, response rates and conversion rates will decline and the cost of generating sales will increase.
Once you have established which ACORN types are key to your business, you can obtain maps, showing the concentration of these people, by postcode delineation and you can buy or rent mailing lists, including only people that fall within your key ACORN types. With this information you can develop well targeted advertising and lead generating campaigns, using a wide range of media that can be structured to focus primarily on your key ACORN types. And because you have a considerable amount of detail about these peoples’ lifestyles and values, you can ensure that the advertising messages are relevant and appropriate for the target audience involved.
As I’ve already said, I’ve focused on ACORN but there are other similar products available that do much the same thing. What is important for B2C businesses is that they start using these types of tools to improve the efficiency and effectiveness of their marketing and advertising and that they take a more structured, focused and targeted approach to lead generation. In so many markets, creating competitive advantage through product USPs, quality and service issues is becoming much more difficult, as playing fields level out; so competitive advantage is becoming increasingly dependent on smarter marketing, an important part of which is targeting the right people with the right offer at the right time.
If you would like to discuss any of the issues in this article with me or would like any further information.
Log on to my website: www.apbusinessconsultants.co.uk
Email me: anthony.pratt@apbusinessconsultants.co.uk
Call me: Office: +44 (0)1962 715899 – Mobile: +44 (0) 7770 816468
Anthony Pratt 