Capturing new customers is the most expensive growth strategy because it requires significant investment in promotion and awareness-building to attract customers who may not know your business exists.
Primary Implication
Attracting new customers for most businesses is the hardest work done in any business. It’s hard because there will always be multiple more reasons to not buy from you than there ever will be to buy from you.
Use the 7-P Framework to help you confirm who should buy from you, what it is they want to buy, when they are most likely to buy, and where the purchase will occur. Know this, and you will better shape how you promote to your target customer to get their attention and offer them reasons they relate to why they should investigate with urgency what you have to offer.
Overview
Capturing new customers is the most expensive of the three growth strategies to execute. The “more new customers” strategy always begins with attracting their attention first. It is impossible to get a new customer until they know you exist. The inherent problem with awareness-building activities is that they cost money. The other problem is that, more often than not, your awareness-building investments fail to generate sufficient sales to cover the expense of the promotion.
The insights of John Wanamaker show how promoting to attract new customers is difficult. In the 1860’s he said, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half.” In 1861, in partnership with his brother-in-law, John Wanamaker opened his first store in Philadelphia. In 1869, he opened his second store, capitalizing on his name due to the untimely death of his brother-in-law, renaming his business John Wanamaker & Co. In 1875, he purchased an abandoned railroad depot and converted it into a large retail store, called John Wanamaker & Co.
“The Grand Depot” was the first department store in Philadelphia. John was a creative innovator, a merchandising genius, and proponent of the power of advertising. We still quote him on the challenge of advertising, because he identified an inherent challenge in promoting your business that is still true today.
The sixth organizing principle in the 7-P Framework associated with how shows how important Promotion + Packaging decisions are to your business success. Unless your business is “impulse-based,” you are constantly battling the “awareness” obstacle. Remember, creating awareness is the first difficult step in capturing new customers.
