Launching New Business: Acquiring Customers

July 8th, 2011 by Slabs | Print Launching New Business: Acquiring Customers

MJTrends initially started out as primarly an Ebay based business. I had a website, but all new customers were coming through Ebay. The first year every time you make a sale it’s like Christmas. A few more dollars in the bank, a satisfied customer, everybody’s happy. Every quarter sales doubled – at that rate I’d have my million within a few years.

However, Ebay got more and more expensive – not only in terms of the fees they were taking, but also from the operations side of things. You had to take pictures of new product, upload descriptions, list the auctions, manually run credit cards for people who didn’t want to use PayPal or a send a check, manually manage invoices, etc. The website had everything automated. I needed to get more people to use it if I were going to continue scaling and I needed to streamline operations.

My first foray into advertising came with Google. I created a few adwords campaigns centered around keywords focused on the items we were selling. For the first 6-9 months it worked ok- then the fraud set in. Almost overnight my monthly budget got swallowed up in the first week of the month from clicks from Nigeria and I saw no conversions. Next month, same thing. Google refused to offer a refund, and that would be the last time I used them.

Marketing tip #1: Be an expert:
By now I had been in business for 2 years, and the site was gaining traction with search engines. Ebay sales represented only half of my customers. I also found that my previous customers were talking about us and sharing our link with their friends and others who needed the products we sold. Sensing that MJTrends was becoming the expert in the niche of vinyl fabrics, I set up a forum whereby users could ask questions or I could post emails and answers to customers questions and comments. Later I added videos and tutorials to the site, again to enforce the view that MJTrends was an expert in our field of expertise.

At this point the business was 90% consumers and 10% small businesses and I wanted to expand to the buyer who would make larger purchases. After sifting through sales data, I realized that theater groups were a perfect fit. I hired a sales agent to put together a list of targets and begin cold calling. She would offer a coupon for 10% off that would be entered during checkout so that I could track her sales. After 10 weeks of cold calling over 500 potential clients, I hadn’t gotten 1 sale.

Marketing tip #2: The rule of 6
People listen to friends, family, other enthusiasts and take action from those conversations 6 times more often than they take action from formal advertising – or a cold call sales pitch (Buzz marketing). The best way to advertise is through word of mouth. Get people talking, seek out write ups from the media, post on forums where you can be seen as an expert, write articles on your subject matter and get them published in places where your customers are looking. Traditional advertising traditionally sucks. It has it’s place, but the best return on the dollar is getting other people to talk about you.

Marketing tip #3: Customer Service
You could sell a widget that does the laundry, washes my car, vacuums, and gets the kids to go to bed on time, all for the low low price of $19.99, but if you customer service is horrible forget about being in business very long. Your best evangelists are your current customers, and they can also be your biggest enemy. Upset a single person and it has repercussions that extends up to thousands of people. They tell everyone they know about their miserable experience with your company, which then spreads among that network, etc, etc. They post on Yelp or the Better Business Bureau and anytime people search for your company on the net, guess what else comes up.

The same goes the other way. If your customers love your service, they tell their friends, they post on forums and drop your link, etc. Not to mention, it’s hard work and costly to get that customer – keep them for as long as you can. Poor customer service drives up the cost of customer acquisition.

Marketing tip #4: Experiment
By now a theme should be starting to grip you – every time I tried traditional advertising or sales methods, I lost money. Magazine ads, online ads, cold calling, none of these worked especially well. My greatest success in marketing came when I thought outside the box. I found a big name site within the Cosplay world (costume play for those not in the know) and convinced them to run a contest. Cosplay participants are big fans and purchasers of MJTrends fabrics.

Cosplay girl.

Cosplayer decked out in costume.

Members could upload pictures of themselves in their costumes and the community would vote on the best. The winner would receive a $500 gift card to a Cosplay clothing company (who I contacted and got to go along with the idea) and $500 gift card to MJTrends. With $1,000 dollars on the line the site got a ton of traffic and participants. The Cosplay world had never seen anything like this, and everyone and their brother blogged about it. Sales for that month went through the roof. Susan and I were putting in overtime trying to help out our staff keep up with the orders. It was phenomenal! The $500 I spent on the contest was the best marketing money I’ve ever spent, and I made it back 10 fold before the contest even ended.

 

Acquiring customers is hard and expensive. Figure out how you’re going to do it without spending money on traditional media. Be an expert, get people talking about you, constantly experiment, and offer top notch customer service. If you are launching a new business this is only the tip of the iceberg. Marketing and sales is a never ending evolving experience. My advice is to be creative, ethical, and enjoy the journey.

Checkout my next post to read about my experiences driving customers within lead generation as product manager at Datran.

 

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