Selling to new customers is just so costly

We all know the old adadge that selling to new customers costs a lot more than selling to existing ones, so perhaps we should just stop chasing new ones - in these austere times that might make sense.

However, as I've mentioned here before (Customer Acquisition vs Customer Retention), it does seem that going after these expensive new customers is much more attractive than some boring direct marketing to exisiting ones. However, this blog is not about urging you to spend more time on your existing customer marketing (I'll leave that for another day - as Chad Bauman says, "Want to get into trouble? Concentrate on new audiences" - so we'll come back to that), but about how you should approach your new customer acquisition.

Just marketing to exisiting customers is a non starter - old customers go away or die and if you didn't replenish the existing customer pot, you will soon run out of people to sell to. Remember, your existing customers were new customers once.

Part of the problem is that we think of marketing as a cost, something we have to spend money on and as such something to cut when times get tough. Marketing, done properly, is an investment. You are using some of today's money to generate an income stream in the future. And that is the key and like all investments it needs analysis and decisions.

It is not enough to compare the cost of a sale to an existing customer to one to a new one. On a campaign basis that is always going to lose. What we need to look at is the lifetime value of a customer and use that information to identify the best source of future exsiting customers.and what ongoing activity is going to maximise the return. So get out those spreadsheets and start looking at your best existing customers and where to get more like them.

Lifetime Value is the key to good new customer marketing.
... oh, so I was talking about marketing to existing customers after all

When is technology successful?

I think of technology as anything that is developed to make our lives easier and more productive (although not necessarily better). However, not all technology developments are successful. Some fail to be adopted and vanish into the blue yonder, possibly even some good ones. Some get remembered as a quirky or amusing anecdote, most disappear without a trace.

Technology becomes successful when we no longer perceive it to be technology, in fact when we cease to see it at all. When we stop wondering about how it works; when we use it without worrying about whether it will or not; and just use it without really thinking about it - that's when technology can be thought of as truly successful.

In the early years of any technology several things stop it moving into the realms of general usage and it is addressing these that moves it in the right direction:

• Cost - new technology costs an arm and a leg;
• Reliability - it usually breaks down and breaks down often;
• Usability - it is new and no one really knows how to use it and if you do you really need to know the nuts and bolts;

Part of the usability problem is that the new technology often tries to emulate existing technology - the first motor cars really were horseless carriages; television was radio with pictures; the website was a brochure on a computer screen.

This is a two edged sword: emulating existing technologies is probably essential to give users a frame of reference without which it maybe very difficult to get the technology adopted. Replicating the interface to the technology may make it easier for new users to get the hang of it, but it stifles the potential of the technology.

Technologies take time to grow into themselves - it took many years for the car to move away from looking like a carriage; television took decades to develop dedicated formats; mobile phones have only recently started developing functionality that the connection method enabled; the web is only now starting to develop into its own persona.

A technology takes time to develop into a unique application - and only become successful when we don't realise that they are there.