It’s all about customer acquisition

“The purpose of business is to create and keep a customer.”

― Peter F. Drucker


I watched an entrepreneur pitch yesterday and his deck didn’t include a single slide on customer acquisition. Unfortunately this is all too often the case with entrepreneurs. They have learned about trying to paint a picture of a large enticing market opportunity and that they have to lay claim to garnering a big chunk of it, but exactly how they will accomplish that is often ignored.

Given that yesterday’s pitch, like so many these days, was for a mobile app, let’s take a quick stride through what customer acquisition means for an app developer.

  1. Discovery – with over two million apps in Apple’s App Store and Google’s Play Store how will your potential customers even find your app? This is where you really need to lay out your marketing plan – whether it’s social media, traditional media, partnering or best yet, built-in virality – how much money you will need to get customers to discover your app and how you’ll spend it are critical to your business plan. See my post on the new sales funnel.
  2. Download – once your app is discovered what will motivate your prospects to download it to the phone? How will you generate positive reviews in the app stores and other means of getting people to take action? Make sure that all your pitches do end with the call to action for your audience to download your app.
  3. Engagement – unfortunately, downloading an app is necessary, but far from sufficient to build a  business. It’s the job of marketing to get the app discovered and downloaded, but it’s the job of product development to make the app engaging enough so it is used frequently. Most apps are downloaded and used just once or twice and either deleted or shuffled off to the last screen of the home page. During app development make sure you focus on driving frequency of use – making your app engaging.
  4. Tell a Friend – the cost of customer acquisition in the consumer market is far too high ($150 a head or more) to rely on advertising or other traditional marketing spend. Your customers have to love your app enough that they want to tell a friend to download it – that’s what it means to go viral. See my previous post on why you need to build virality into your product, you can’t simply paste it on.
  5. Monetize – the tradition path in consumer apps is to gain traction – very large number of users, with high month over month growth, before monetizing. But like virality, you need to think about your business model before you develop your app. If you are going to rely on a freemium model or in-app purchases, architect your app to enable those business models. Understand the lifetime value of your customer, because the value of your business is based on the aggregate value of your customers.

The barrier to entry to start an app company has never been lower, given all the development tools, and help from incubators, accelerators and mentors like the MIT Venture Mentoring Service. But that means that the battle to gain people’s attention has never been fiercer.

So while I believe that anyone can build just about anything, I don’t believe that anyone can sell that thing. Too many startup teams are too focused on the supply side – creating the product, and not enough on the demand side – selling it. Don’t be one of those!


Author: Mentorphile

Mentor, coach, and advisor to entrepreneurs, small businesses, and non-profit organizations. General manager with significant experience in both for-profit and non-profit organizations. Focus on media and information. On founding team of four venture-backed companies. Currently Chairman of Popsleuth, Inc., maker of the Endorfyn app for keeping fans updated on new stuff from their favorite artists.

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