Acquire New Business

What is the best way for a business to acquire new customers? To use advertising, discounts, and coupons? Or to offer unprecedented customer service and to create an exceptional experience for existing customers?

There’s no one-size-fits-all answer. It all depends on what your company is looking to achieve. Do you want more growth or more profit?

Whatever the answer, the tactics are the same: analyze your market share, identify potential markets and customers, create a marketing strategy tailored to your unique situation — and then execute it with precision.

How do you acquire new business?

Dave Ramsey: Acquire New Business

by Don Peppers

Posted Mar 29, 2005

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Key to the success of your company is how effectively you acquire new business. However, there is no single best way to go about this; what will work for one company may not work for another. Acquiring new business should never be a random process — it must be intentional and strategic. The most effective way to build a sustainable business is by targeting a specific segment of customers who need exactly what your company offers in an irresistible way at an affordable price.

The first step in acquiring new business is to understand your current and potential customers. Do they want a product, a service, or both? Every company can benefit from having both offering on its menu — but don't try to sell both until you have proven that you can deliver one or the other profitably. For example, many companies have tried to sell hardware and high-end software only to lose their shirts serving these markets. Computer Associates (now CA) was one of the first companies to offer products across the entire range of products and services needed by small- and medium-size businesses. It has been profitable doing so for more than 20 years and now enjoys annual revenues exceeding $5 billion.

How do your products and services compare to your competitors'? It's often said that the right product wins. This is true only to a point. The one thing for sure about acquiring new business is that not all products are created equal. Customers buy products because they create a solution for a problem or satisfy an unmet need — and if you can't provide the solution or satisfy the need, you don't get the deal. A product alone, no matter how great it is, will not make you successful in acquiring new business. What's more important than your offering is what others are offering and how those offerings enable you to go after new customers profitably — without taking on unnecessary costs and risks. Make sure you have a clear understanding of how your business is positioned against other businesses in the marketplace.

If you have only one source of revenue, then you are dependent on only one customer and are at the mercy — and control — of that customer. To avoid the risk of being dependent on a single customer, put together multiple streams of revenue: raise your prices so you can reach more profitable customers; add additional products or services for existing customers; find ways to strike new deals with increasingly larger customers; develop alternate sources of revenue outside your product line.

The more streams of vendor-controlled revenue you have, the better off you will be in terms of cash flow and profit margins. As you grow, acquisitions are a highly effective way to augment your sales and marketing efforts. For example, in 1995, when LSI Logic introduced its new line of mini-computers and peripherals, the company quickly expanded its offerings to include power management solutions and network testers. The company was able to put together one of the industry's strongest portfolios of products without taking on the risk that comes from depending on one customer.

Because acquiring new business is such a key element in building a sustainable business, it must be handled on an ongoing basis. Don't wait for something to go wrong; act proactively if you see an opportunity arise. If you have too much debt, for example, interest can become a factor, and if that happens, your profit margins will get eaten away.

A large segment of customers is always available for sale to others. This is the case in every industry. The best customers are ones who want more from their suppliers, who work harder for you and want more for less; the worst customers can't buy what you are selling because they don't care about your product or service; and in-between are those looking to trade with you but not as hard as they work with you. If a customer holds such characteristics as these, it's likely that he or she would be receptive to switching suppliers even if doing so means giving up something they value. ____________________________

Don Peppers, president and CEO of 9Line, is the co-author of The Success Principles: How to Get from Where You Are to Where You Want to Be by Don Peppers, PhD (HarperCollinsPublishers; September 2005). He is a frequent keynote speaker and business consultant who has worked with companies ranging from Fortune 500 to start-ups. Peppers also blogs at www.yontoo.com . His books have been translated into 20 languages and are best sellers in both the United States and Germany. Peppers holds a doctorate degree in counseling psychology from Purdue University.

Recognize the business-building opportunities that lie outside your product lines. Some companies have found success in acquiring customers and suppliers outside their customary business. For example, Continental Airlines' acquisition of the shuttle service from Shuttle America led it to become a major player in the package shipping industry. It also won new customers, such as United Airlines, which has ordered a new fleet of Boeing jets from Boeing because of Continental's expertise in this area.

Don Peppers is the co-author of The Success Principles: How to Get from Where You Are to Where You Want to Be by Don Peppers, PhD (HarperCollinsPublishers; September 2005). He is a frequent keynote speaker and business consultant who has worked with companies ranging from Fortune 500 to start-ups. Peppers also blogs at www.yontoo.com . His books have been translated into 20 languages and are best sellers in both the United States and Germany. Peppers holds a doctorate degree in counseling psychology from Purdue University.

A company's ability to grow is limited only by its ability to allocate the correct resources — including people, money and time — to the key issues that need addressing.

The most effective way for a company to transfer its revenues into higher profits is through new revenue streams, not through profit increases from existing revenue sources.

The larger a company gets, the more difficult it is to maintain a profit margin that is acceptable to both employees and investors. To meet such challenges, companies have created new structures for allocating resources.

In the early 1990s, for example, when IBM realized it was entering the last stages of its PC business, it began selling personal computers offshore at low prices because IBM wanted to reduce costs and gain a foothold in foreign markets. In 1993 alone, IBM transferred $20 billion out of the U.S., including $1.5 billion in tax benefits and tax-free bond-financed dollars that were used to create manufacturing facilities in Japan and China.

Conclusion

In the early 1990s, for example, when IBM realized it was entering the last stages of its PC business, it began selling personal computers offshore at low prices because IBM wanted to reduce costs and gain a foothold in foreign markets. In 1993 alone, IBM transferred $20 billion out of the U.S., including $1.5 billion in tax benefits and tax-free bond-financed dollars that were used to create manufacturing facilities in Japan and China.

About the Author

Don Peppers is the co-author of The Success Principles: How to Get from Where You Are to Where You Want to Be by Don Peppers, PhD (HarperCollinsPublishers; September 2005).