The art of ‘customer acquisition’

Promotions, Discounts, Advertising & Customer Lifetime Value

What is Customer Acquisition?• ‘The process of persuading a consumer to purchase a company’s

goods or services’http://www.businessdictionary.com/definition/customer-acquisition.html#ixzz3yMyWhfaD

Helps a business to build a customer base, in order to achieve:

Increased Sales Increased brand loyalty Increased repeat purchases

Promotions, Advertising & DiscountsPromotions & Advertising Discounts

‘An activity designed to boost sales of a product or service’ and to increase public awareness

Examples include:• BOGOF • Online Adverts• Trade Shows • Sponsorship • Newspaper & Magazine Ads• Search engine Optimisation (SEO)

‘Reducing the price of a product(s) or service below its list price’ for a certain period of time

Customer Lifetime Value?The prediction that the value of the business will come from the on-going relationship with their customers. Customer lifetime value helps firms to estimate the future long-term profitability of customers.

Law, J (2009) DICTIONARY OF Business and Management , 5th edn., : OXFORD UNIVERSITY PRESS.

AdvantagesPromotion & Advertising Discounting Customer Lifetime Value

Increased brand awareness

Improved reputation & repeat purchases

Increase in sales (both short & long-term)

Increased revenue in the short-term (improve cash flow)

Could encourage repeat purchases

Encourages more spending on other goods

Able to sell off outdated stock(improve stock turnover)

Helps to decide amount of capital to spend &/or resources needed to remain profitable

Acquiring new customers can be expensive, therefore holding onto current customers can be beneficial

Helps to evaluate the profitability of various marketing strategies

DisadvantagesPromotion & Advertising Discounting Customer Lifetime Value

Sales effect may only be short-term

Promotion from larger businesses or high-end businesses may create a negative stigma (damage brand image)

Time Consuming

If number of sales do not increase then the firm may lose potential profit

Impact upon brand image

Accuracy may be limited

Hard to determine those customers who are ‘valuable’ and those not.

Discounting on SimVenture

https://www.youtube.com/watch?v=0A0vwBXiuAA

MCQ1. Customer acquisition is?a) The method of analysing customers

b) The process of persuading new consumers to purchase a company’s goods or services

c) Calculating how much each customer is worth to the business

d) The number of customers a firm has

2. What of the following is not a form of promotion?a) BOGOF

b) Trade Shows

c) Questionnaire

d) Loyalty Card

3. A customers purchases that generates the net-present value of future profits for a firm is known as?a) Customer purchase value

b) Customer relationship management

c) Customer satisfaction value

d) Customer lifetime value