Have you sat in a Management or Board Meeting of a company in the Business Services sector and thought: ‘how can we get more customers?’ Have you looked at the Marketing line in the annual budget and asked: ‘what would happen if we spent double or half this amount?’. There is no reason that your business shouldn’t be able to answer these questions just as well as the fastest growth ecommerce or VC-feted SaaS platform.
When we work with Business Services clients – in categories ranging from accountancy firms to consultancies selling to investors to marketing agencies – we address these questions by talking about ‘Customer Acquisition’. Among the many potential levers available to accelerate customer acquisition, there are four that we find most effective for the Business Services sector, that we’d recommend as starting points for any investor or CEO:
1. Define your ICP
An Ideal Customer Profile (ICP) is a description of the customers that you would most like to acquire for your business. In other words, if one more customer walked in the office door (metaphorically), what do you want them to look like?
The ICP is a more specific version of the long-used “target market” concept in marketing. The ICP, however, goes beyond demographic/firmographic information and can include customer problems, the triggers that have caused the customers to start considering a purchase, organizational structure, decision-making processes, and more. It should also consider the ‘personas’ you are targeting – the job titles and functional responsibilities of the key decision makers for your particular service offering.
Both marketing and sales teams can use an ICP when setting up demand generation activities (e.g. prioritising partnerships or digital marketing), selecting target audiences, creating messaging and designing the customer journey. They can also help other customer-facing team to maximise the relevancy of your proposition and customer experience to your target customers.
I use three criteria when determining the ICP for one of our clients:
“Likeability” – which customers are going to be worth the most to your business over time, because they spend the most and/or stay the longest?
“Available targets” – this is the number of potential customers of any type that are available for your to target, which should be an output of a market & customer segmentation exercise. If possible, I like to think about this as the number of prospective customers who are likely to be ‘in-market’ at any given time, say within a year.
“Likelihood” – which prospective customers are most likely to convert, based on how well your product/service meets their needs, or in other words – solves their problem(s).
2. Mystery shop your customer journey
Businesses tend to work in vertical silos, whereas the customer journey progresses ‘horizontally’, from marketing to sales to onboarding to account management. When one aspect of the journey is designed or updated; there is no guarantee that it will fit with the whole. It is just plain difficult to really put yourself in your prospect or customer’s shoes without going through the same journey as they do, and mystery shopping is a great way of doing this.
Think of this like role play – imagine the situation of a typical customer for your business and try to replicate it. This is the time for some method acting, so be prepared to go full Day-Lewis to best match the real customer experience. Put yourself in the shoes of potential customer per your ICP, and act accordingly. Take notes, screenshots and videos of your experience – for example how long did it take to get a response when you submitted an enquiry. Our research has shown that speed of response to an initial enquiry is closely correlated with customer conversion.
To summarise your findings, I’d suggest coming up with some relevant criteria and scoring your experience out of five on each. Create a highlight and lowlights list. Try to specifically call out the points at which you might have walked away. This might be more impactful if you are able to make a comparison to a couple of competitors who you’ve also mystery shopped, in particular if that would be the typical customer journey.
3. Measure & attribute your Customer Acquisition activities
Attribution is the process of determining how different marketing & sales activities contribute to customer acquisition. It plays a critical role in measuring the effectiveness of your efforts and helps businesses to optimise their budgets and strategies for maximum return on investment (ROI) and minimum waste. Ask your marketing & sales leaders to tie each acquired customer to the activities that (i) introduced them to your business and (ii) ensured that they converted.
If you get this right, your conversations about marketing and sales should transform from talking about ‘costs’ to talking about ‘profit’. This might cause some discomfort at first, as more commercial scrutiny gets applied to each marketing activity, but this is temporary – a trusted attribution model can streamline decision making and remove tensions between finance and marketing & sales leaders.
4. Deliver great service to drive advocacy
Customer advocacy is most effective, cheapest, and in every case where I’ve measured it, the biggest marketing channel that will never feature in your ROI reports or marketing section of the board pack. I’ve asked the ‘what did you do to start your research’ question many times in primary research in markets as diverse as dentists and cyber security software, and invariably a recommendation from a peer has been cited by about one-third of the respondents.
As well as it just being common sense to seek recommendations from informed contacts when you are making a purchase for the first time, there is something deeply social in asking for, and giving a recommendation. A great recommendation builds relationship capital – and a poor one can damage it.
Now, pause for a moment and think about how much money your marketing team spends driving customer advocacy, versus say, running paid search ads or paying a team outbound SDRs to cold call prospects. The imbalance is often striking. You can start to address this by measuring customer likelihood to recommend with Net Promoter Score and addressing the pain points that prevent existing customers from advocating for your business.
As an investor or CEO, your ability to work through these six steps will depend on the calibre of your marketing and sales leaders. One of the questions I’ve found to be most helpful in determining this is to ask: ‘where would you spend your next £1?’ Of course, this could be £100, £10,000 or £1 million depending on the size of your marketing budget today – but this question helps you and them to understand both the strategy they’re pursuing and their understanding of what is working /not working amongst their activities today.
The most important thing to say about this question is that there is no single right answer. The silver bullet is not TikTok ads, billboards on the tube, attending more trade shows or a shiny new marketing automation platform. In fact, it’s not really about the ‘what’ of the answer at all, but the ‘how’- the thought process that has been used to answer your question. Ideally, a thought process that has happened long before you’ve asked the question. Think back to your exams at school – we are more interested in seeing the workings than the final answer.
If you are developing a value creation plan in the Business Services sector, you will likely have many levers available to drive growth, but almost certainly one of the highest potential opportunities will be adopting a more strategic and commercial approach to customer acquisition. The four steps I’ve highlighted will support you in identifying the biggest opportunities and create a ‘north star’ for your marketing and sales leaders to follow.
If you’d like to discuss how you can acclerate customer acquisition, please Contact Us.