On Black Friday, Did Brands Acquire Customers or Rent Them?

On Black Friday, Did Brands Acquire Customers or Rent Them?

Black Friday represents the start of the holiday selling season for consumer product companies. It’s the gateway to a vital time of year for brands, with as much as 50% of annual revenue generated in the month between Thanksgiving and Christmas. The importance of this period is reflected by marketing spend, with American brands spending $6 billion on media and $23 billion on digital advertising, and generous discounts offered in order to acquire customers during Black Friday and Cyber Monday.

But are brands and manufacturers “acquiring” customers, or merely renting them?

Realistically, there really is no true “customer acquisition,” as brands do not own customers – individual consumers are free to do business with whomever they chose.

A popular metric used by brands is Customer Acquisition Cost (CAC) – the initial cost to persuade a customer to purchase your goods or services. The very name suggests that customers are ‘acquired.’ But if the customer is unknown, the brand must spend the same amount to persuade a customer to purchase their goods or services for every transaction, much like a rental.  When looked at this way, without a customer identity consumer product companies aren’t acquiring customers, they’re renting them.

The reality is consumer product companies rarely know who is buying their products: resellers or distributors don’t share this information, and the vast majority of consumers don’t register their products because it has no value to them and it is inconvenient. In fact, each year an estimated 3 billion consumer durables such as consumer electronics and appliances are bought where the brand has no contact with, or knowledge of, the end user. So for consumer product companies, customers are predominately rented, not acquired.

Customer acquisition delivers huge leverage opportunities – it’s 5x more efficient to market to a known customer than an unknown customer, it lowers customer service costs and limits recall liability. Real relationships with actual customers can be mined to learn customer needs to develop new product that better satisfy them.

At RacerX we have done some “out of the box” thinking on how to replace ineffective product registration as the means to capture customer data for consumer electronics, household appliance brands and tool manufacturers.

If you’ve been renting customers, contact us to learn how to acquire them.