IT and Business Insights for SMB Solution Providers

Customer Lists: Buy or Build?

Referrals and lead-generation campaigns aren’t the only ways to develop customer lists.

By Samuel Greengard

One of the basic tenets of business is that growth is good. Yet expanding a customer base can become a vexing task. Although many channel pros grow their opportunities through referrals and orchestrated lead-generation campaigns—and both can be highly effective—the opportunities don’t stop there. It’s also possible to buy lists and even acquire companies to gain access to customers.

The bottom line? “It’s not easy to determine a path. Most firms struggle with the task,” observes Michael R. Harvath, president and CEO of Bloomington, Minn.-based Revenue Rocket Consulting Group, a firm that aids channel pros in building their businesses and acquiring outside companies. “Too often, there’s the belief that an ideal prospect is anyone who is willing to pay for products and services. In reality, you must understand who your ideal prospect is and build a customer list and a marketing strategy around this.”

Time and Effort
Of course, many channel pros depend on referrals and traditional lead-generation campaigns to expand their customer base over time. If your firm has a person on staff with the time and bandwidth to tackle the task—typically poring over public sources of data and examining websites, a process that may require 20 or more hours a week—than the approach could be effective. “It’s not rocket science but it does require a fair amount of time and effort,” Harvath explains.

List brokers are another option. Although they typically cost 50 cents to $1 per name versus about $1 to $2 per name to manage the job internally, “they allow you to outsource and use staff time more effectively and strategically,” he says. If you opt to purchase a list, find a quality broker that guarantees the validity and quality of the list and promises to update it over time, typically quarterly. In many cases, channel partners work with list providers through an ongoing subscription arrangement.

Yet there’s another approach that channel pros often overlook. Amy Babinchak, president of Harbor Computer Services, of Royal Oak, Mich., and co-owner of SellMyMSP.com, says that business leaders should consider acquiring another MSP. This can provide access to an expanded customer base or, with synergistic products and services, entirely new opportunities to cross sell. In a best-case scenario, these newly acquired customers will “transfer their loyalty,” she says.

The caveat is that the process can prove complex and there’s a need to “focus on the transition,” she says. “Customers and employees will both view your business with skepticism. Even when owners are careful to preserve jobs, employees don’t like to feel like they’ve been sold along with the business.” Babinchak also points out that finding the right acquisition target isn’t easy. “Business owners don’t want their clients to know that they are for sale, so you’re unlikely to find them advertised,” she says. Thus, a channel firm may require the assistance of a consultant or a firm specializing in acquisitions.

Important Considerations
Whether a business opts to build or buy a list, a simple but profound fact stands out: “Any effort to expand must be part of a comprehensive marketing effort,” Harvath says. The goal isn’t to acquire more names to send marketing materials to and interact with, it’s to generate new business and revenues. “You don’t just send out an email and [then] people beat a path to your doorway. You really have to think about a list and an audience within the broader spectrum.” This includes branding, a website, the number of impressions on an audience, gated assets such as videos and white papers, and more.

Moreover, any initiative requires ongoing time and effort, Harvath insists: “Anybody can create a strategy but very few organizations are great at acting on the strategy. It’s important to understand how to navigate the process and how to get the maximum return on an investment. Sending off emails and marketing materials alone won’t get the job done. There’s already too much noise in the marketplace. You must approach the right audience with the right message. That’s how you achieve success and the best possible results.”

About the Author

Samuel Greengard is a freelance contributor who specializes in business and technology writing.

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