Notes for Customer acquisition presentation Customer Acquisition:

• Customer acquisition is ‘the process of persuading a consumer to purchase a company’s goods or services’

• Customer acquisition is important for any start-up or growing business, as acquiring new customers is crucial for survival. It helps a business to build a customer base

through retaining and gaining new customers, through various forms of marketing. • In addition, it helps to build brand loyalty and encourage repeat purchase, which

ultimately should increase sales. • If the cost to gain customers outweighs the ability of a firm to monetise those

customers, then ultimately the business model is flawed, and there is a probability the business will fail.

Promotions etc. • Promotions & discounts are an activity designed to boost sales of a product or

service, and to ultimately increase the public awareness of such product/service. Common examples include: BOGOF, Trade Shows, Sponsorship & online advertisement

The acquisition channel a firm chooses depends on target market the firm is looking to exploit.

• Discounts are when the price of a product or service is reduced below its list price. • Customer lifetime value is the future long-term profitability of a particular customer.

It helps firms to realise the value of an ongoing relationship with their customers. Advantages:

• Promotion & Advertising: results in increased brand awareness and improve reputation, which can ultimately help to encourage repeat purchases and result in an increase in sales

• The advantages of discounts are that it usually results in an increase in short-term revenue, which can improve the business’s cash flow. And it also enables a firm to sell off outdated or unwanted stock, helping to improve stock turnover.

• Customer lifetime value helps a business to evaluate the profitability of its marketing strategies and helps a business decide the amount of capital and resources needed

to remain profitable, which allows them to adjust such strategies to increase

competitiveness. Disadvantages:

• The disadvantage of Promotion & advertising is that sales may only be short-term is marketing isn’t effective. Also, can be expensive and time consuming to pursue.

• Discounting could result in a negative brand image forming, and ultimately is sales do not increase, the profit margins are going to fall.

• For Customer lifetime value, the disadvantages are that its accuracy may be limited as it is hard to determine those customers who are valuable and those not.

SimVenture Discounting: • Ultimately price chosen affects how many enquiries are turned into orders,

impacting the profit figure of a company. However, in order to be competitive and raise the number of orders, one approach could be to offer customers a discount.

• In SimVenture discounting can be an effective method to increase orders, if prices are lower than competitors. However, you need to make sure that the discount isn’t

too high, otherwise the profit margin will suffer greatly, and perception of quality could be adversely affected.