The new technologies making customer acquisition cheaper

Cloud computingCloud computing and devices such as the iPad are starting to drive down the cost of winning new clients. David Bicknell investigates

With any line of business that starts to mature, companies have to evolve to bring down the cost of customer acquisition.

Sourcing customers is essential to any business. It is often pointed out that in tough economic situations, where budgets are limited and spending is curbed, it is more efficient to retain rather than acquire customers.

Ideally, customer acquisition should be focused as close to the point of purchase as possible, to ensure that whatever product offered is as relevant to a potential new consumer as it can possibly be, thus increasing the probability of acquiring that customer.

Here, technology can help, with a string of solutions now being used or considered by travel organisations: the iPad, instant messaging and online chat, unified communications, mobile devices and now, cloud computing and software as a service (SaaS).

Matthew Poepsel is vice-president of performance strategies at Gomez, a specialist in optimising the performance, availability, and quality of organisations’ web and mobile applications. He says his customers have seen a strong interest in cloud computing, with flexibility and cost at the top of the list of benefits, especially with the switch from capital expenditure to operating expenditure as computing is purchased and delivered ‘as a service’ rather than ‘as a product’.

One early adopter of cloud computing is the online travel company Orbitz. Its decision to use cloud-based SaaS offerings enabled it to grow more rapidly and freed managers to concentrate on core competencies.

However, the company, which is both a user and a provider of cloud-based services, is one of a number of cloud companies that see a need for cloud security standards as customers question, for example, where their data is held ‘in the cloud’.

The pervasiveness of the cloud is such that Microsoft, which is selling applications via the cloud through its Azure service, is expected to have 90% of its engineering team working on cloud computing in some way within a couple of years.

For organisations considering their sales and marketing and customer acquisition options, there is no getting away from the success of Apple devices and their short and long-term impact.

Humphrey Sheil, chief technology officer at Comtec, says he is optimistic about devices such as the iPad for the potential they offer as well as technologies such as instant messaging.

“We’re excited about the iPad and devices like it. We have not seen bookings on mobile phones, only browsing, but we genuinely think people will book travel on tablets,” he says.

“The new advertising framework (iAd), and the equivalent from Android when it launches, also represent good marketing opportunities for leisure travel wholesalers to reach customers directly. Live chat is also already well in place with a good number of Comtec customers. We see it especially useful for higher-value transactions such as cruising, high-end tours etc.

“From end to end, technology should [by now] have made the online channel a more cost-effective channel for customer acquisition and retention, but the blunt truth is that many companies have simply stopped paying print, radio and TV and instead give that money (and sometimes more) to Google.

“Savvy companies are now beefing up on their natural ranking scores using sites with good search engine optimisation, viral marketing and social marketing to work to reduce their cost of acquisition and retention online.”

With the ongoing interest in the iPad still at a high, advertising agencies and software developers have welcomed Apple’s new iAd network as a potential breakthrough that could give an important boost to the fast-growing mobile advertising market. Because Apple controls the operating system that underpins devices such as the iPhone, iPad and the iPod Touch, Apple believes it is possible to deliver more creative forms of advertising to run inside the apps that users download on to these device.

Advertising inside apps has become the hottest corner of the mobile advertising business, prompting a race between Google and Apple. Although Google stole a march on Apple by striking a deal to buy the Ad Mod mobile network, Apple is now in a position to potentially leapfrog Google by enabling more effective “in-app” ads that would let advertisers do things like run video without forcing them first to leave an app to visit a different website.

From a customer acquisition perspective, the new ad formats are likely to create new opportunities for e-commerce interests, especially travel companies, to target consumers to buy things from inside an app. There are two possible drawbacks: advertisers are likely to be worried about additional ad formats, with iAd not having large volume or reach initially, and production of the ads is also likely to be costly.

Travel companies are already taking advantage of the platform. Content provider Lonely Planet has created an app for the iPad that showcases 1,000 travel experiences. The company says the iPad “is a ground-breaking device that gives us the flexibility to publish content in extraordinary ways”.

The 1,000 Ultimate Experiences App will allow iPad users to experience Lonely Planet’s top 1,000 recommended experiences. Inspired by a Lonely Planet book called 1000 Ultimate Experiences, the app re-imagines the book-reading experience as a deck of 1,000 cards which users can swipe, flick and thumb their way through, bringing together the top ideas, places and activities to inspire that next trip.

Mobile is another channel that is now beginning to be used to lower the cost of customer acquisition. Gomez says the mobile web is growing at an unprecedented rate. US mobile network operators such as AT&T have reported a 50-fold increase in mobile data transmission in the past three years.

And mobile is impacting revenue. eBay’s mobile sales volume is growing in the double digits every month and its iPhone application has generated $400 million since its launch in summer 2008. The problem for organisations in choosing a mobile channel for customer acquisition is that while mobile web users may be willing to trade some functionality for the “anytime, anywhere” convenience of the mobile web, they’re not willing to sacrifice site availability and speed.

A recent Gomez study of more than 1,000 US mobile internet users found a majority of them expect websites to load as quickly on their mobile phone as they do on their desktops.

However, two out of three mobile web users have encountered problems when accessing websites on their mobile phones in the last 12 months, with slow load time being the number one issue. That means mobile web experiences are not matching visitor expectations, putting revenue, customer relationships and brand loyalty at risk.

One development which is belatedly starting to gain traction is unified communications. Web Applications UK, which develops reservation systems and e-commerce travel applications, said it had recently had strong feedback from its travel industry clients on the benefits of unified communications, using Microsoft Office Communications Server (OCS) as a cost-effective alternative to a PABX.

Craig Dean, Web Applications UK’s chief executive, says discussions he has had with travel industry clients suggests both large and small companies can benefit. Dean says Web Applications UK has itself saved about £50,000 using unified communications, benefiting from reduced telephone costs by using Voice over IP (VoIP), and reduced travel expenses costs by using videoconferencing.

“There are opportunities for major cost savings on call costs using internet telephony and for larger organisations with multiple sites. For smaller firms, there is the prospect of cost savings through a ‘business in a box’ solution once the price gets below £10K.

“Presence is the foundation of unified communications, knowing where you are and how you can be contacted,” says Dean. “I was in a cinema when a call came through from a client who had a problem with his website at a critical time. We weren’t involved with the site, but as the client wasn’t able to contact his web provider, we were able to help.”

How unified communications can reduce the cost of customer acquisition

1) Reduced travel and training costs

Using the web and videoconferencing, as well as other unified communications solutions, can connect participants with meetings or “events” where they do not need to be physically present. Using unified communications solutions to deliver training to employees through their desktops provides savings in areas of travel, specific training costs, and productivity, because employees can train in their own time rather than at set times.

2) Lower real-estate and facility costs

Using collaborative technologies such as presence-awareness and videoconferencing means organisations can expand operations and geographic reach without the costs of additional office infrastructure.

3) Reduced telephony and conferencing service charges

Traditional conference call services are expensive. Organisations will see significant reductions in the amounts paid for dial-in meeting services purchased from teleconferencing vendors by replacing them with IP network-based conferencing capabilities. Presence awareness and unified communications products result in fewer telephone calls because callers can see the availability of intended recipients and recipients can determine rules for how they wish to be reached.

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