Two of our team members recently shared stories of companies who made some strange choices during their lead acquisition process.
Story# 1: Charging For Food Tasting
The first story involves wedding planning. Our team member and his soon-to-be wife were told by their venue they could choose between three different caterers, two of which took them out to dinner and allowed them to try their food.
It’s a smart conversion strategy, right? The third company didn’t think so. They opted to charge $15 for a tasting. Needless to say, the couple didn’t even go for the tasting. They were more than happy with the company they ultimately chose.
Story #2: Charging For Not Choosing a Company
Our second story involves another team member who was looking for wood flooring for his house. Some companies were more than happy to show them samples, some even lay the flooring out in your house for you to see.
One company scared him away with an offer that was too easy to resist. It was actually more of an ultimatum. The contractor stated that if the he was going to spend the time (money) coming out there to show flooring samples, our team member was going to have to pay the contractor a fee if he decided not to go with their company.
He never called them back.
Businesses Must Invest in Their Customers
There is one simple thing that these two companies in two very different industries have in common: they refuse to spend money to acquire clients.
This shortsightedness on client acquisition costs is what drives many companies’ marketing efforts into the ground. They either outright refuse to invest in their marketing strategy, or they refuse to spend any money by giving something to potential customers (i.e. offers, discounts, freebies, etc.) in order to gain their confidence and ultimately convert them.
Winning business is hard, especially in competitive markets like catering and contracting.
Businesses need to make it easy for customers to say yes, rather than giving them reasons to say no. Charging for quotes or demos of products sets up pointless barriers that drive leads away from a business.
Businesses Don’t Succeed By Cutting Corners
Just like no person ever became rich by saving money, no business ever grew beyond measure by cutting costs. Businesses need to be willing to invest in order to grow. The same applies to acquiring leads. Multinational corporations spend millions to wine and dine prospects and win new business, smaller companies can spend far less by eliminating needless barriers.
If a prospect can lead to a big sale (say $20,000 on a new roof), it’s well worth it to spend $100 to acquire a single lead? Even if a company were to spend $20,000 to acquire 200 leads they would only have close on one (a 0.5% close rate) in order to break even. Closing on 2 leads (1%) yields double the investment. This ROI increases much more if a company hits their average closing rate. The better a businesses close rate, the more they should be spending to acquire leads.
Give Something Up
There is no way to get around one simple fact: it costs money to acquire customers.
Ask yourself if would you rather go with a company who charges you to demo products or services, or one that offers that same demo for free. In both cases we laid out, our employees opted not to go with those companies who refused to give something up for the chance to win business. It may be hard to spend money to acquire leads, but when you look at the cost per lead in comparison to the business you have won, it makes all the sense in the world.