Among the many business proverbs Mark Cuban has said, one of my favorite is "you don't own your business, your customers do." This is truer now more than ever. If you acquire the right customer, ideally a high profit and high passion superconsumer, then you not only acquired a sale but a stream of powerful insights as to how to make your business better. Acquiring the right customer can lead to a great customer review, which can make or break your business.
Given how important customer acquisition is, it amazes me how many startups-and large companies-still get it wrong and choose simple yet totally inefficient and inaccurate ways to acquire customers. Here are two ways companies get it wrong and a solution to significantly improve it.
Don't Fall Prey to Deceptive Demographics to Acquire Customers.
So many startups rely just on demographics to acquire customers. Age is a common mistake, as for decades many businesses would target baby boomers. This might have worked a while back when American households were more homogenous. But this bad habit remains pervasive as startups target millennials, despite the fact that the millennial cohort is more diverse than ever before.
When you dig into the data, so many myths are busted demographics and product and brand sales. Age is not predictive, as 40 percent of a 'kid's cereal' brand like Lucky Charms cereal is eaten by adults per General Mills. Ethnicity is not predictive, as 80 percent of hip hop music is bought by suburban white males. Income is not predictive, as Hispanic market research expert Isabel Aneyba of Comarka Consulting & Research shared that lower income, Hispanic immigrant consumers are very profitable consumers of high end, large smartphones who use the device as their primary computer, TV and multi-media center.
Don't Rely Purely on Behavior or Emotion to Acquire Customers.
Of the startups that move beyond demographics, some have shifted to pure behavioral metrics or pure emotional metrics to acquire customers. This is in fact a step forward, but not quite far enough.
Pure emotion can feel like a compelling and better way to acquire customers. Emotions are powerful and often drive behavior. But emotion without proper context and quantitative support can lead a startup to a consumer target that is so small it's like dancing on a needle. And you end up wasting your precious dollars trying to find a needle in a haystack. Or the emotion is powerful, yet fleeting. Which is like trying to catch butterflies in a net. Budweiser Select is a clear example of this. It was an outstandingly well executed customer acquisition campaign with big dollars and celebrity brand endorser Jay-Z. But the idea for a high end Budweiser for clubs and nightlife was so small, it never got traction.
Pure behavior can be misleading as just because someone bought a product yesterday doesn't mean they will buy it again tomorrow. For some categories a buying decision is very much context driven. For example, I bought our minivan because we had kids. Once we are empty nesters, I don't plan to buy a minivan again. Or for some categories, variety seeking creates a lot of noise. Snacking is a great example, where many consumers have a half dozen or more brands in their rotation that they switch from often just because they feel like it. The risk of a false positive is very high.
Mix Passion & Profits-Superconsumers-to Fix Customer Acquisition.
The key to better customer acquisition is to blend behaviors and emotion together. Specifically, the goal is to find the most passionate and most profitable consumer to guide your customer acquisition strategy. I call these people 'superconsumers', which is the basis of my book Superconsumers: A Simple, Speedy and Sustainable Path to Superior Growth.
The key here is to find customers who buy a lot and care a lot about the category. What you want to do is take a list of your best customers and check two things. Do they buy a lot of the category (not just your brand)? And do they have an emotional investment in the category (again, not just your brand)?
If the answer to both questions are yes, then you have a superconsumer. My research has shown that these consumers often comprise 10 percent of customers but often 30 to 70 percent of category sales, even more category profit, and 99 percent of the insights to grow a category.
Once you find one the key is not just to acquire them, but actually find, understand, engage and unleash them to recruit customers to your startup. The very best way to acquire more customers is to have superconsumers do it for you.
This is a customer acquisition technique that I've seen work time and time again across a wide variety of businesses of all sizes. Make sure your startup has embraced customer acquisition strategies of the future and not be stuck in the past.