Sales vs customer acquisition: A million dollar distinction

Words are powerful.

Need proof?

Before it became one of the highest rent districts in New York City, Soho, the neighborhood south of Houston Street, was called “Hell’s Hundred Acres.”

John Wayne’s pre-Hollywood name was Marion Morrison and Google’s original name was “Backrub.”

Enough said.

But getting the words right isn’t just for marketing to others, it’s also essential for keeping your own mind on track and getting the most from your efforts.

Look beyond the word “sales”

Businesses, by necessity, focus on sales. They have to.

Without sales, a business idea is just a theory and you can’t pay the rent with theories.

However, sales rung up on a given day or week or month are not the end all and be all of business. In fact, focusing on sales alone can and does create a mental roadblock that keeps promising businesses small and puts small business out of business.

A sale is a bankable event – and that’s a good thing – but sales figures alone don’t tell you much about the health of your business and the trajectory it’s on.

…But if you intend to stay in business, grow your business, and get the maximum possible return on your efforts and investment, you’ll profit mightily by looking a little bit higher.

Here’s the problem with counting sales alone

Sales are not always created by positive events. They can be generated by discounting, by using hype, by making false promises, by selling something to someone that you know is not right for them.

In fact, if you look at much of what passes as “Internet marketing” as taught by the gee-whiz guru crowd, almost any tactic is considered good if it generates a sale without any consideration at all of how the sale is generated or who it’s to.

This is fantastically short-sighted.

A business that generates “amazing” sales this way one year can be out of business (or doing massively reduced business) a year later as many flash-in-the-pan marketing gurus demonstrate in their own businesses.

So, if sales isn’t the best metric, then what is?

Pros focus on customer acquisition

You could argue that “customer acquisition” is just a fancy word for sales – and you’d be dead wrong.

Peter Drucker when asked what the two key components for business survival are said “innovation and creating customers.”

Notice that he did not say “sales.”

When you talk with serious business people, especially entrepreneurs with significant direct marketing based companies, you’ll find that customer acquisition is their real obsession.

A sale is a golden egg. A customer is a goose that lays golden eggs.

Which would you rather have?

The problem for many business people, fledgling and experienced, is that customer acquisition takes discipline and can’t be faked, whereas sales…well, tell me about your “Million Dollar Day” again Mr. Guru…

You can temporarily juice sales with all sorts of tricks and techniques (some ethical, some not), but the tricks eventually wear out and the sales figures go back to where they belong, which in some cases is zero.

What doesn’t wear out is a customer who has reasons to buy from you on an ongoing basis and has decided that you are the best source of satisfying his needs.

Reality check

To get customers like this, you have to: a) actually have the goods and b) make your customers happy.

Can you see how this involves a little more than just selling, at least in the sense most people think of it?

Smart companies don’t reward sales people based on sales figures alone. They also include lifetime customer value and customer satisfaction in their calculations.

After all, why reward salespeople for jamming products down the throats of people who never buy again and worse, have bad things to say about your business?

As for small business owners who are their own salesmen, why follow the advice of gurus whose demonstrated method of operations is to sell as much as possible, using any means, regardless of the results for buyers and the long-term health of the business?

Great things happen when you get this right

When you focus on customer acquisition, a lot of very good things happen.

You’re automatically reminded every day that:

1. New people are the lifeblood of your business. If you’re going to last, you have to bring in new people all the time.

2. Developing new prospecting sources and methods that help you acquire new customers is an ongoing need not something you do once and then forget about.

3. There’s an ideal customer for your business and the more you know about that person – what motivates him, where to find him – the more effective your marketing and advertising will be.

4. There’s an ideal introductory offer which makes it easy for the biggest number of potential customers to try you out and developing and improving on that offer is one of the most important things you can do as a business owner.

5. Your products and customer service (the total customer experience) have to be good enough to turn new buyers into customers (people who buy again and again) and hopefully raving fans who’ll bring you new customers by bragging about their good experience with you.

6. The process of turning a first time buyer into a second and third and forth time buyer is where a customer – and your business – is made. It’s not made by the first sale alone.

7. Ideally your business is configured to offer solutions to customers on an on-going basis, not as a one-shot event.

These seven areas are where fantastically profitable businesses are born.

The entrepreneur who over-focuses on sales and getting them any way he can misses out on all of them.

By all means, track and count your sales, but if you want to succeed massively, focus on customer acquisition – and retention.

P.S. If this approach to business makes sense to you, you might enjoy my book “The System Club Letters” which covers these topics and much more.

Click here for: More information about The System Club Letters

– Ken McCarthy

P.S. For over 25 years I’ve been sharing the simple but powerful things that matter in business with my clients.

If you’d like direction for your business that will work today, tomorrow and twenty years from now, visit us at the System Club.

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