Customer Acquisition and Product Distribution Strategies
Written by James Garvin for Gaebler Ventures
Customer acquisition and distribution channels are vital for a business to succeed, yet many entrepreneurs do not factor these channels into their strategy. The "build it and they will come" mentality has been proven time and time again. Knowing how to build a customer acquisition and distribution channel will help your businesses avoid the trap that others fall victim to.
Business is all about finding customers to buy your product and providing them a place to buy your product in a manner that generates profit for your firm.
While there are many factors that go into the process between finding customers and selling to them, these are two critical components that require more attention then they usually get. We can think of customer acquisition and product distribution as the book ends of your book shelf. Sometimes these bookends are left out of an entrepreneur's strategic plan, but with out them, the things in the middle won't stand up.
Customer acquisition is an art as much as it is a science. Word of mouth is generally the best way to acquire a customer, but is often the most difficult to achieve. There is no right or wrong strategy to acquire customers, but it is critical that you carefully outline a plan of how you plan on getting customers to know about your product and how much it is going to cost you to get those customers. Customers don't come easily and they usually don't come free, so spend your marketing dollars wisely.
Product distribution on the other hand is placing your products in places for your customers to buy. Just saying, oh, I'll sell it on my website, isn't enough. Even Amazon spends over $50 to acquire new customers through strategic marketing initiatives. The reason firms like Coke and other strong consumer brands are successful, is because they have a huge competitive advantage in product distribution with grocery stores, vending retailers, and more. It's not very hard to find a Coke is it? Just like Coke has provided their customers the ability to purchase their product just about everywhere, you need to think of where and how you can place your products in the most effective places possible.
Drawing on an example from an industry such as road side assistance, we can learn a lot of just how important customer acquisition and distribution channels are. For the most part, consumers have no idea who their local road side assistance company is, and that's okay because they don't need too.
When a driver gets stranded on the road, their first call is usually to AAA. If you are a preferred road side provider for AAA, they will call your dispatch letting you know that there is a stranded motorist who needs assistance and you therefore get the business. This relationship you have developed with AAA provides your road side assistance company with a steady stream of customers for the local area that you serve. Now, imagine being a road side assistance company that did not have a formal relationship with AAA? How would that firm acquire customers? They could try direct marketing tell consumers, "next time you break down, call us", but for the most part that would be a costly and ineffective endeavor, since most of us need road side assistance only once or twice in our lifetimes.
This analogy can be drawn on for most industries, but it's something that most of us don't' think about enough because we tend to follow the belief that customers will somehow magically find us because we have built a really great product. With out the proper customer acquisition strategy and distribution strategies, you're firm will remain with out customers.
James Garvin began his education studying biotechnology. In recent years he has turned his interest in technology to helping two internet startup companies. The first business was an online personal financial network and the second was an e-marketing platform created to help entrepreneurs demo their web sites. Currently a student at University of California Davis, James is spending his summer incubating two new online businesses and writing about his entrepreneur experiences.
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