After you meet a prospect what do you do with the information they have shared with you. If it’s a hot prospect I dare say you hang on to that information. You might even make some notes about your meeting.
How about for a prospect that appears to be not so promising at this point in time. Are you leveraging the information that you can learn from your prospects? Companies who are, are achieving a lower cost of acquisition per customer by as much as 20%.
If the prospect gives you some of their bills to analyse:
Do you use the knowledge that you’ve gleaned from analysing the bill to personalise the offer that you will present to them?
Do you use their billing information to help get a better idea of the pricing landscape?
Do you capture the date that they are coming out of contract and diarise a follow-up meeting so you can close them at that time?
If not, you had better start doing it soon.
Smart companies are already using all the data shared by their prospects to build a better understanding of their prospects and to optimise the customer experience. They are using not only the competitive pricing and product information that is available on their competitor websites but also the billing information that is shared with them by prospects. This information is combined to make a more intelligent offer (we know what they are paying now) tailored to the prospect (we know which products they are currently using) and presented at the right time (we know when they are coming out of contract) resulting in much higher conversion rates.
In addition, knowing that a prospect owns their business premises, combining that information with online real estate data gives us an indication of the size of the premises. Geo-spatial data can tell you the aspect of the roof and whether there are any obstacles for solar generation, e.g. a tall building next door. Combining these customer attributes with billing information builds a rich and full picture of that prospect. Now, in addition to understanding their current profitability you are able to look at their future profitability.
Given that there are only a finite number of customers in the marketplace, and that not all of those customers are profitable we want to make sure that the customers we attract are not only profitable now but will ideally grow in profitability over time.
The numbers tell the story simply and clearly. Say you are able to achieve a respectable 20% conversion ratio from your selling activity. To keep the numbers simple, let’s say it costs you $1 to communicate with each prospect so to target 100 prospects you are spending $100, given the 20% conversion ratio that results in 20 customers. So, the cost of acquisition is $100 / 20 customers = $5 /customer. Now, let’s go back to the 80% of customers who didn’t convert. We can do so with a more targeted offer now we know more about their needs and wants. However, we don’t communicate with all 80 of them but the top 20 that we identify as the hottest prospects. Because of this superior targeting you know with whom you want to speak and what you should speak to them about, our cost of to communicate with those 20 customers remains the same, at $1 per prospect, so your incremental spend to target those 20 prospects is $20. However, because you are able to communicate using the additional information from your first round of communication your conversion ratio is higher, let’s say it is now 40%, which would result in 8 additional conversions (20 prospects x 40% conversion ratio = 8 customers). So, for $120 we now have converted 28% of your original target, a 40% increase on the original numbers and the cost of acquisition is $120 / 28 customers = $4.29 / customer, a 14% reduction in our cost of acquisition. Very simple and also very effective.
| Campaign | Initial Targeting | Targeting of Unconverted Sales | |
| Cost per Prospect | $1 | $1 | |
| Number of Prospects | 100 | 20 | |
| Marketing Spend | $100 | $20 | |
| Conversion Ratio | 20% | 40% | |
| Conversions | |||
| Campaign | 20 | 8 | |
| Overall | 20 | 28 | |
| Cost of Acquisition | |||
| Campaign | $5.00 | $2.50 | |
| Overall | $5.00 | $4.29 |
Companies that are being systematic and structured in the way that they are capturing and using the information from the many data sources available are going to have a competitive advantage over those that don’t. With billing information being one of the richest data sources around you had better start capturing this information and doing something smart with it. If not, you will be just burning your business intelligence