Customer acquisition is the most important thing to focus on in the beginning of any new business venture. Yet in the hustle of starting a new business, all of the other business-critical details feel more important, pressing, and well… easier.
When just starting out, the business owners I am coaching are understandably concerned about things like:
- Finding and securing a great location
- Building an awesome store
- Hiring a great manager to run the business
These are indeed crucial to the success of your franchise, and each one is undoubtedly easier than finding customers. But without those customers, your business doesn’t go anywhere.
Yes, it makes sense to think in chronological order. After all, it’s hard to think about securing customers for a business that isn’t up and running yet. However? This kind of foresight can make all the difference.
The good entrepreneurs and the great franchise brands that grow and scale quickly clearly understand that customer acquisition is paramount to gaining momentum, and must be worked on from day one. This is why many franchise brands require large grand opening budgets, multiple marketing strategies, and an array of tactics for finding and attracting customers to your place of business.
It is also important to note that customer acquisition is expensive, and to an extent, it’s also a function of trial and error, which means entrepreneurs need to plan accordingly. In my experience, I find it very easy to spend money on marketing. It can add up quickly.
It might sound basic, but a top problem for many small business owners who are unfamiliar with the process of managing these kinds of marketing costs in the early phases of their business is overpaying for customers. This is a common problem for small business owners, and in particular, spending money on marketing that does very little to actually generate customers is also very common. When it comes to customer acquisition costs, it’s essential to understand what these costs can entail so you don’t underestimate the importance of acquiring new customers, but you also don’t overpay to gain their attention in the process.
The key here is to protect yourself and your investment with wise, methodical planning about your customer acquisition strategy. How much are you going to spend on your sales and marketing efforts? Work diligently to make sure you are not overspending for the customers you do attract. Track your cost and benefit of each tactic and know ahead of time what is a reasonable amount of money to spend at each stage of your growth.
Why do I bring this up? From both my personal experience as a small business owner and from my experience as a franchise consultant, I have seen firsthand just how easy it is to spend money on marketing, lead generation, and finding customers. But it’s imperative that you are methodical about how much you are going to spend and how you plan to spend it, then stick with it.
When working with the folks I coach who are starting their franchise journey, I encourage them to look at whether or not their potential franchisor has a customer acquisition strategy already figured out for them:
- How many marketing avenues does your franchisor have figured out?
- Do they have a clear understanding of how much these strategies will cost?
- Do they share a clear vision about how much money you should invest into these strategies?
This kind of support can give you a firm starting foundation to acquire customers. Don’t underestimate the marketing costs you’ll incur in the first few years of your business. When you are just starting out, you have to spend quite a bit of money to get that lead generation flywheel moving and gain brand recognition and momentum with your customers.
Once you have momentum, the next phase for your sales funnel is planning out how you will track and capture customer information and then deciding what you will do with it. After all, you’ve invested in acquiring these customers and their information is valuable. Once you start acquiring customers, you can begin to plan what you will do with it immediately, and in the short and long term to turn these leads into lifelong customers.
When your business reaches maturity, your marketing dollars will come directly from a percentage of your revenue. But at the outset, you haven’t achieved a steady revenue stream just yet. You’ll want to account for marketing in your startup budget to help generate that momentum you’re seeking and reach that point of maturity.
Nothing is more important or valuable to your business than a ton of people that can’t wait to try out what you have to offer. A good friend of mine says, “create massive momentum and then protect the big MO!” This mode of operation or modus operandi is so important, and this path is so critical, but can also be hard to pull off.
My goal as a franchise consultant is to add value to each and every future business owner that I can help. I hope this note has helped you on your path to financial freedom via franchising. Let’s talk about what comes next for you! You can reach me directly by scheduling a call today.