New customers are worth their weight in gold. They are the holy grail of retailing and many manufacturers, retail buyers and store owners will go to great lengths to acquire them.
Their appeal is understandable. Consumers that are new and curious about your brand often seem to represent the future of your business and offer a route to growth and prosperity. And a marketing culture that rewards bold moves and — dare I say it? — disruptive ideas for attracting those potential customers ups the ante even further.
We recently examined some of the ways that retailers and manufacturers of varying sizes and resources are trying to expand their home décor business. They’ve got some inventive ideas. Last fall, for example, HomeGoods and The Home Depot each created a vacation rental home outfitted from floor to ceiling in goods from their respective stores. The House of HomeGoods, situated in New York’s Hudson Valley, was available for four weekends, with a different design theme each time, for $29.99 a night. (They certainly stayed on-brand with their pricing.) The Home Depot partnered with Vrbo and influencers who transformed a 4,000 square-foot lakefront home in the Berkshires into a stylish retreat. (It is still available to rent, for $515 a night.)
HomeGoods and The Home Depot are big retailers with deep pockets and these experiments are more likely a branding and publicity exercise than an attempt to reach the unconverted. On the other end of the retail spectrum is Domaci Home, an independent home décor store in Bethlehem, Penn., that shuttered its brick-and-mortar operation last month and is hitting the road with a converted and customized 14-foot stage trailer that will serve as a store on wheels, going wherever the mood and the customers take them. Owners Warren and Derrick Clark plan to stay local at first, attending Bethlehem’s local summer festival and other venues, but the open road beckons. It is a brave and daring plan, but as Warren Clark told me, “This keeps us more nimble if things get rough in 2023.”
Things are very likely to get rough in 2023. And in slow growth times, the urge to grow, or find the magic bullet that will stave off uncertainty, can be irresistible, said retail consultant Pam Danziger. But customer acquisition costs are expensive, and social media outreach in particular has become more costly due to recently changed privacy laws that make digital advertising harder to track and monetize.
Danziger recommends sticking to your knitting. Look inward, focus on your core business and get more out of the resources you currently have. That includes your existing customers. Acquiring a new customer can be anywhere from 5 to 25 times more expensive than retaining the ones you already have, according to Hunt Club, a recruiting firm, which also said that increasing customer retention by 5% can increase business profits by 25%.
So, hold the line for now, and hopefully in the near future, being bold will once again be worth a pretty penny.