It’s time to initiate the customer acquisition process! In this stage of market development, you will outline potential customer acquisition strategies and channels, prioritize these strategies, and identify the resources needed to execute those strategies.
Patience and Persistence
Here’s where your market development budget that we’ve worked on starts to pay off. It’s tempting to mimic a customer acquisition strategy you’ve read about or seen other companies do well, but first consider the resources those businesses have and compare it against your market development budget.
One of the biggest problems we see with startup customer acquisition strategies is that they don’t anticipate the sheer number of touch points that they will have to make just to get a first conversation started.
In the sales development community, the average number of touch points to get that first response is anywhere between 15-20. Think about that from a simple funnel math perspective:
Fifteen touches across 100 contacts equals 1500 touch points (calls, emails, LinkedIn, etc.). Spread that over six weeks and that’s 250 sales activity per week!
Do you have the time to do that level of activity in any kind of meaningful way that will be successful?
You could automate a portion of this with email campaign tools. But, ask any front line sales person and they will tell you that response rates from non-personalized email blasts have been steadily trending down to rates that just don’t sustain pipelines alone.
So what is the purpose of email today?
When combined with relevant messaging and a persistent approach, email enables you to start building brand and name familiarity in your prospects inbox.
From there all you need to worry about is continuing to add value in their inbox until the timing is right. If you’ve been persistent, you’ll already be top-of-mind when this happens.
Don’t mistake no reply as a “not interested.” For people not familiar with doing outbound market development or sales, the most common reaction to getting no response is to assume that the lack of response is an indication of no interest.
Mistaking no response as an indicator that your ICP hypothesis is incorrect is a critical mistake as this false indicator can lead you away from customers segments that are the best fit and fastest path to revenue.
Until you get definitive feedback from the market – a yes or a no – you should trust that your working ICP hypothesis is correct.
The only way to determine if you have product market fit with your ICP is by actually speaking to them so don’t stop reaching out until you do.
Start by Doing Unscalable Things
Market Development is no place to focus on scale. Thinking about scale at this stage will push you to take actions that are against your own self interest at this stage. You want to focus on acquiring revenue for the purpose of learning; scale will come once you’ve demonstrated repeatability in revenue acquisition.
As a new business with little market awareness, the best place to start building your customer acquisition strategies are with people already friendly and familiar with your product.
You don’t want to have to waste precious time and runway earning the right to have the conversation before you know how to properly frame it. Likewise, your ICP at this stage should be relatively small so you don’t want to go to your best possible customers before you have a firm grasp of how to work with them.
Your bank account does not know the difference between referential and cold outbound revenue. The difference between these two is the cost to learn.
By completely exhausting your existing network to learn and remove friction points from your sales process you will be able to significantly accelerate your sales cycles and improve win rates once you go outside your network.
Planning, Documenting and Tracking
Time to scroll over (or down on mobile) to the Resources/Downloads section and grab the Customer Acquisition Strategy spreadsheet. Open it up and begin to list your potential customer acquisition strategies and how you plan to execute them.
Here’s what to fill in for each one:
Capture Data and Learnings
As you execute on a variety of customer acquisition strategies over the course of several months if not years, it is imperative that you remain diligent about capturing data and insights about the successes and learnings of any strategy.
You don’t need to get in front of hundreds of people. You just need a few Mr. and Ms. Right Nows. We’re acquiring revenue for the purpose of learning, and you can learn a lot in just three to six conversations.
The goal is to test strategies in small batches and eventually get to scale.
When examining campaign effectiveness you should avoid talking about how you “felt” things went and focus on the hard data:
Learning is critical here, as most customer acquisition strategies take anywhere between 2-3 months to start producing consistent new conversations.
In many cases, this lag time is too long to bear which forces you to pursue suboptimal customer acquisition strategies that are either low value, low quality or very high cost.
The most important function of this exercise is to enable you to skip that lag time entirely once you see that your existing pipeline of business is starting to wane.
At any given moment this document should have at least one customer acquisition strategy that is in a ready-to-go, turnkey state that you can initiate the moment you need it.
Pipeline volatility is one of the most common yet least addressed problems for all startups that can be avoided simply by being just one step ahead.
When the time does come for you to hit the scale button, if you’ve been capturing objective information about each strategy, the Customer Acquisition Strategy sheet will serve as an invaluable playbook.
Today, it also serves to guide your data acquisition strategy. And that’s up next week in #gxmxp!