Chapter 13. Acquiring Customers (Part 1)

The second word of the marketing concept of PARM is acquisition. You’ve positioned your business in the digital marketplace, you’ve created a unique brand, and you have a dynamite product or service offer. Now it’s time to promote that offering to consumers and attract them to your online storefront.

Acquiring customers has to be the most important and the most challenging job of any e-commerce business. Not only must you determine which of the many available acquisition tools to use, but you also must use those tools properly. Here’s a list of the most important tactics and tools for customer acquisition covered in this chapter:

• Watering-hole marketing

• Advertising

• Email marketing

• Internal marketing

But before we go into these in detail, we need to first discuss where to find the prospects of your target market.

Watering-Hole Marketing

We’ve learned that developing a unique selling position coupled with a target market is the most efficient way to market your online storefront. But what’s the most cost-effective way? That’s where the concept of watering-hole marketing comes into play. That’s the person, place, or thing that already has attracted your potential customers’ attention and credibility. If you find these sources, you find not only your potential customers, but also a strategic partner that could market your product for you—for free!

If you know where to find the watering holes of the target audience you want to reach, you are halfway toward your goal of acquiring customers who would respond to your product or service offering. If you find the correct watering hole, you will have the drinkers’ attention.

Here’s an example of watering-hole marketing. Suppose you run a company that sells telephone equipment to apartment complexes and small businesses. One way to find potential customers is to do cold calls and buy lists of companies that just received business licensees. But cold-calling can be very inefficient and costly—and by the time a company has its business license, in most cases, it has already purchased its phone system.

A better way is to talk to title companies. Any commercial building or apartment complex that is being built needs to have a title search. Title companies guarantee that the title to the property being built on is free and clear of liens. Because this search must be done on any property before a bank will extend a construction loan, it makes the title company a watering hole for businesses that need a new phone system for the building or for future tenants.

Using a title company does one other thing for your business: It positions the title company as a credible source of information, one that has the attention of those at the watering hole. In this situation, you could approach a specific title company and offer an exclusive program to commercial property developers and businesses—perhaps a discount on a phone system or a free extended warrantee. The title insurance business is competitive, so title companies love these kinds of deals that differentiate them for the competition. And because the major title companies are nationwide companies, working with them to help find prospects would give the telephone business national coverage for their product.

Here’s another example. Suppose you owned a pet clothing company. Where’s the watering hole where pet owners congregate? Veterinarian offices, for one. You might put sample brochures in the waiting room with your company’s logo, telephone number, and Web address.

What’s Your Marketing Goal?

Before you rush out and begin spending money on marketing your Yahoo! store, make sure you know what you expect to accomplish with your marketing plan and which marketing tool will provide it. That is, decide what you expect for your return on investment (ROI) from your marketing endeavourers. That ROI could mean more than just increased sales. You could also spend money on marketing to achieve the following:

• More inquiries

• Sales leads

• Repeat customers

• Attention from the media

• Registrations

You can use many of the marketing tools discussed here for a variety of results; your ROI might not necessarily be a sale right out of the chute.

Finally, whatever the goal of your ROI is, you mustn’t forget the call to action (CTA). An actionable CTA asks the reader of your marketing piece to take an action there and now. For example, “learn now” is a much better call to action than “learn how.” Use active voice when writing your CTA. Do customers know what is expected of them when they read your promotion? Is it to buy? Register for a contest? Download a file? Join a club? Subscribe to a newsletter? Ask for further information? Don’t be vague about the action you require from your customers or prospects.

Advertising

The old adage goes, “Early to bed, early to rise, work like a dog, and advertise.” But what advertising works best? John Wanamaker, manufacturer and dry goods pioneer once said, “I know half my advertising is wasted. I just don’t know which half.” The good news is that you can get immediate and real feedback on your marketing tactics when you’re marketing online.

Let’s first clear up some confusion over the differences between adverting and marketing. As you can see by the organization of this chapter, advertising is a subset of marketing—just another tool in the marketing toolbox. But unlike online print advertising that talks at the consumer, online advertising talks to the consumer and gives you the necessary feedback of whether you are meeting the ROI goals of your advertising.

You can use a number of advertising vehicles—some free and others that have a cost. These online advertising vehicles are available to you:

• Banner ads

• Contextual ads

• Electronic newsletter and e-zine ads

So, what will it cost? Most marketing experts agree that you should devote 3% to 8% of your annual sales to your total advertising and promotional budget. And that’s not including any promotional start-up costs. Look at the amount of money that Travelocity, Orbitz, and Expedia spend just to build brand. This is why strategic partnering and media partnering are important. But before you pull out your wallet and get ready to spend ad dollars, you should know how to speak the lingo of Net advertising.

The Language of Net Advertising

Internet advertising has split, combined, and multiplied into a bewildering array of approaches to advertising on the Net. Abbreviations such as CPM, CPC, CPA, CPT, and CPS make the novice Net advertiser’s eyes glaze over.

Let’s go step by step through this seemingly incomprehensible zoo of letters. We first define them and then show how you can make the best use of your Internet advertising dollar. There’s a new world out there for advertisers on the Net.

Today’s Net delivers accountability it in spades—not just audience estimates, as in the real world. When you advertise on the Net, you know exactly how well your ad campaign is doing by the number of impressions, click-throughs, and responses that you get from your advertising efforts. You must measure to see these results.

Impressions are correlated with awareness or brand advertising. You count impressions by how many times your ad is presented to a viewer. If the intent of your advertising campaign is to raise awareness of your product, service, or brand, the number of impressions per dollar is of prime importance—that is, you want the most impressions you can get for the lowest ad dollar.

Click-through, in response to an ad by a consumer, simply indicates interest or intent. When a consumer clicks your ad or goes to a URL that you’ve advertised in an email message or newsletter, click-through provides you with an opportunity to offer something for sale or to even complete a sale. Other uses include filling out a survey or asking the viewer to take some other kind of action (conversion). You can equate this with a potential buyer opening a direct-mail envelope to read the offer inside. The better the ad, the more potential it has to be acted on. If your intention is to have the viewer click your ad or go to your site, the number of clicks (or visitors to your site) per ad dollar is of prime importance.

A response is indicated by either providing leads for future sales or completing sales themselves. A response also could include a software download. If your objective is to actually make a sale or have the viewer complete an action, the number of responses per ad dollar is of prime importance.

Now, let’s see how impressions, click-throughs, and responses play out in the alphabet soup of Net advertising:

• CPM (cost per thousand impressions) is the number of times your ad is viewed. Another way to say it is the number of times the ad is displayed. When you buy based on CPM, you’re paying each time a consumer views your ad. Click-throughs to your site and sales are not your prime objective here; brand or image awareness is.

• CPC (cost per click) is the number of times your ad is clicked or how many people actually go to the URL you are advertising. Your objective is to have them “open your direct mail envelope” and view your offer.

• The last group of abbreviations in this advertising alphabet soup is CPA, CPT, and CPS. All three of these fall, more or less, under the same umbrella. Using these schemes, you pay for only an actual response to an offer, not just a view or click-through. CPA (cost per action) is the number of times the desired action takes place on your site, such as a sale, a registration, or a download. CPT (cost per transaction) is the cost per lead. This type of banner ad is similar to CPA, but you pay only for people who click your banner ad and either fill out a registration form or are sent to a page on your site where they can view the full offer. CPS (cost per sale) is similar to CPA, but you pay for only leads that generate a sale.

Not every one of these approaches is perfect for everyone. Decide first what type of action you are willing to pay for and then negotiate your best deal.

Common Advertising Vehicles

Banner ads, sponsorships, contextual ads, and electronic newsletter and e-zine advertising are the basic advertising vehicles that you can use to promote your Yahoo! store.

A banner ad is like a small billboard that resides on a Web page. Buying banner ads from individual sites is one way to get your message out. Another is to buy ads on a banner network. But you can also run banner ads for free if you join a banner exchange network. Banner exchange networks trade banners ads on your website with banner ads from other websites on a rotating basis. A third-party banner ad server delivers and rotates your ad and others throughout the network. The only thing you have to do when joining one of these networks is add some code on your website to display other members’ banner ads on your site.

Generic and industry-specific banner ad networks exist. For targeted traffic, it’s best to join an industry-specific network. To find your industry-specific network, go to Yahoo.com and search for “your industry banner exchange network.” You can also go to some industry-related websites to see if they have joined a banner exchange network and find out how you can also join. But heed this warning: Because you do not have control over what ads are displayed on your storefront, a competitor’s ad (or other inappropriate ad) might appear on your site because your competitors are likely using the same keywords you are displaying on your site. A network might eliminate a lot of the work of negotiating deals for individual banner ads, but there is a risk that you will end up displaying ads for your (possibly bigger) competitors and driving visitors away from your site.

Contextual advertising is a way to place your promotional ad next to related content, such as a news article or a product review. Why are contextual ads a good advertising vehicle? Well, people use the Net for more than just searching for products to buy. In fact, the largest use of the Internet is to find information. If your banner ad or text ad shows up next to or within an informative piece that a consumer is reading, you might enter the consumer’s mindset of a targeted market, which would get that person to visit your storefront. It also creates a perceived endorsement of your product or service.

Advertising in newsletters and e-zines can be a cost-effective way of reaching your targeted audience. The cyberworld has its equivalent of the printed media of the real world: email newsletters and e-zines (electronic magazines). You can advertise in any of thousands of newsletters and hundreds of e-zines, each focusing on a particular market niche. And don’t forget the many forums, discussion boards, and blogs. Forums can be very specific, so they’re great for going after niche markets. Blogs are newer but might be worth targeting, depending on the quality of the blog and the market you are targeting.

Is advertising effective? Should you consider using it as a promotional tool? One story tells of a businessman who did not believe in advertising. When his e-business did not fare well, guess what he did? He advertised it for sale.

Advertising is a necessary evil that, if used properly, can help you reach your company’s marketing goals. It’s all about the ROI.

Email Marketing

What could be better? A marketing piece that’s easy to use, costs no money to produce, costs next to nothing to send, and reaches millions of prospects in a matter of minutes. That’s email marketing, one the most cost-effective ways for an online business to market and get people to purchase goods and services. There simply isn’t an easier, cheaper, more direct way to talk to someone online.

Though it sounds easy, email marketing takes a lot of work to do right. You start with a clean email list of people who have confirmed their willingness to receive your email offer (have opted in). Then, you target and personalize that offer for the best response. And that’s the most important part of email marketing—sending only to those who have asked to receive your offers. With your Yahoo! store, you can sign up for Campaigner by GOT, an integrated Web-based email-marketing tool that enables you to collect opt-in emails during the checkout process. You can sign up for an account by clicking the Email Marketing link in the Store Manager’s Promote column.

Spam is the opposite of responsible, or opt-in, email marketing. And spam is the bane of any good email-marketing program. Though sales might be made from spamming email addresses, your online business reputation can be harmed in the process. In addition, spamming violates the Yahoo! store Terms of Service. Spam can get your store closed. But you don’t need to spam to mass-mail. If you follow the CAN-SPAM Privacy Act of January 1, 2004, you can still market through unsolicited mail. It’s easy to abide by the law, and you might see a response rate of 15% to 25%.

So before you plan your grandiose email-marketing scheme, be aware that opt-in email marketing is really permission marketing. It’s a good idea to find out how to get that permission and the ways to get the best results.

Best Practices of Permission Marketing

So just what is meant by permission marketing? Permission marketing means getting the consumer’s permission to email an offer before it shows up in the email box.

Sound simple? But that’s not all.

First of all, if at any time the consumer wants to opt out of your email-marketing pieces, he or she needs to be able to easily do so by visiting your website or clicking an automated link in the email. Either set up an automated system that removes an email address from your database when a recipient clicks on it, or create a separate opt-out URL on your site where recipients can go to remove their email address from your list. The law also says this must be processed within 10 days.

Second—and very important—these consumers gave you permission, not anyone else, permission to email them. Don’t give or sell email addresses (that is, consumers’ permission to be emailed) to any other company or person. If you do, you need to clearly state your intentions in your privacy policy.

With permission marketing, you get by giving. Although spammers are currently getting good response rates on their email spams, that’s changing fast. Consumers are wising up and are demanding that the spammers be curbed. That’s being done in two ways:

• The Realtime Blackhole List (RBL)

• The CAN-SPAM Privacy Act

If you’re thinking about spamming, think about these first. Antispammers rarely complain just to their Internet service provider (ISP). They complain to your ISP, your ISP’s backbone provider, and just about everyone else who is in between you and the electronic path to the recipient. These providers will often terminate your Net connection, if only to stop the complaints.

If losing your Internet connection is not scary enough, then listen to this: The Mail Abuse Prevention System, at www.mail.abuse.org, runs the Realtime Blackhole List (RBL). They have compiled a list of IP addresses of known spammers and offer this list to their subscribers. Who are these subscribers? Email administrators. Using the RBL list, these administrators reject any email that originates from those IP addresses. That’s right, any email—not just bulk email!

The CAN-SPAM Privacy Act went into effect on January 1, 2004, and comes with some stiff penalties; however, compliance is easy. Requirements include “The subject line must be truthful” and “the return email address must be real” and “There must be a conspicuous Opt-Out.” At several websites, you can paste your emails to have them checked against all the SPAM Checker rules. The sites analyze your email and comment on how to correct them to be sure they go through.

Here are a few sites:

• www.enetplace.com/spam-checker.html

• www.lyris.com/resources/contentchecker

• http://spamcheck.sitesell.com

Getting permission is extremely important for your email-marketing strategy and the reputation of your e-business. Plan to do it right.

Choosing a Proper Opt-In Email List

When you have your email marketing campaign ready to go, you need a list of prospects to send it to. Keeping in mind the CAN-SPAM Act and the Realtime Blackhole List, you want to make sure that recipients on the email list you rent have given the list broker permission to email to them.

This called an opt-in email list. An opt-in email is the direct opposite of spam. People who opt into an email list have said in advance that they are willing to receive unsolicited email from companies on the Net that meet the list criteria. For example, someone who wants to be kept informed of newly released software might opt into an email list that announces new software products.

If you want to email responsibly, use the services of the opt-in list companies on the Net to prospect for new customers. The first company to collect, categorize, and offer for sale nonspam opt-in email lists is Postmaster Direct, at www.postmasterdirect.com. The company offers for rent lists of 30 million consumers in more than 400 categories and demographic breakdowns.

So what is double opt-in? According to the New Zealand marketing Association, “Double opt-in is an email subscription practice that allows marketers to ask new email subscribers to confirm (via email) that they want to be added to an email distribution list for promotions, before the subscriber actually receives the information. The double confirmation is the best guarantee of user interest.”

Here are some keys rules for doing email permission marketing:

• Identify yourself —Let your prospective customers know who you are right up front. If you’ve rented an opt-in list, remind consumers that they opted in. Include a sentence reminding them why they’re receiving your email. Also, if you’re mailing to another business, send your email from either a real person in your company or at least an alias with a title.

• Always provide a “from” line —Give recipients a valid address to which they can reply.

• Keep the subject line short —The subject line is the outer envelope of an email campaign. This is the vehicle that decides whether your message will be read. Your choice of words—and the length of the message—is critical. Keep the number of words in the subject line to no more than 35 characters.

• Keep the message short —Keep your message less than one page: Email is most effective when it’s short and simple. After you introduce yourself, give a brief description of your offer. Capture consumers’ attention the first two or three lines. Within the offer, give them a link to click or refer them to the URL of the buying page. Keep the message to 500 words.

• Provide value for their time —Make it a compelling or limited-time offer. Offer something that consumers couldn’t already buy from your site: perhaps an exclusive offer made only through your email. Offer coupons or a free sample. According to Forrester Research, two-thirds of consumers like free samples, but only one-third of merchants offer them.

• Be ready to apologize —People’s memory can be short, and they can forget that they opted into the list. Additionally, consumers’ tastes or needs might have changed. If they complain or ask to be removed from your list, respond immediately and politely through an auto-responder. You have 10 days to remove a customer after such a request.

• Make it easy to unsubscribe —Place your unsubscribe instructions at both the beginning and the end of your email message. Don’t make consumers call a phone number to unsubscribe. The law says you must provide a link to quickly and easily unsubscribe.

Email marketing for prospects and customers can be a valuable addition to the acquisition strategy of your marketing plan. Keep in mind the important points of what you’ve read here, to help build a successful email-marketing program.

Internal Marketing

E-commerce sites spend a lot of time and money attracting potential customers to their site. Yet, once there, they cease to market to them. That’s where internal marketing tactics come into play. Here are some to consider:

• First-time visitor page —Create a page where you can direct first-time visitors from your home page (see Figures 13.1 and 13.2). This simple page can be a powerful marketing tool that gives you an opportunity to restate your unique selling position and tell why a visitor should by from you, offer a small set of frequently asked questions on why visitors should buy from you company, and then a special offer to first-time buyers, such as free shipping or a special discount.

Figure 13.1. CouponSurfer.com offers a link on its home page for first-time visitors.

Figure 13.2. A “first-time visitor” page gives instructions on how to use the website and coupons.

• Online surveys and polls —If done right, online surveys and polls can be useful tools for acquiring leads from visitors to your Yahoo! store to market to later. Create a poll with an intriguing question. Visitors might answer the question to see how their opinion compares with others. In the process, they can share some of their interests with you so you can further target potential customers. For example, if you sell fashion clothing, you might ask, “Who will The Bachelor eliminate this week from the show?,” because you think that people interested in fashion might watch The Bachelor TV show. You then can connect the poll to a survey that asks what category of fashion clothing on your site they feel would make the female contestants more desirable to the bachelor. This would give you a window into their fashion preferences.

• Referrals —One of the best ways to acquire a visitor’s attention and provide an objective third-party review of your business, product or service is the referral. Just doing a good job servicing a customer is not enough to generate a referral: You need to ask. The best time is just after the customer has received the ordered product or service. Don’t wait a week or so to ask in a follow-up email how customers rate your company and if they would allow you to use them as a referral or a testimonial on your website. Do this immediately. And don’t worry about rejection. If you ask every customer to respond to your email request, you will gather enough referrals and testimonials for your use. If necessary, even offer an incentive to reply to your email survey, such as free shipping on their next order, a discount coupon, or even a free sample.

• Additional marketing materials —Use the space in the product boxes to include materials such as a catalog or information on special offers.

Now that you’ve learned how to attract prospects and customers to your Yahoo! store using some of the basic marketing tools, it’s time to learn how to use the most popular way to attract visitors to your Yahoo! store: Internet search engines and directories.