A year in, I hadn’t cracked the code for sales – our way. I wasn’t going to do the Golden Flamingo and the salespeople I had recruited weren’t doing so well without “Flamingo perks”. I had even dedicated 3 months to full time field sales myself and the results were sobering, but the experience was useful in ways that we’ll discuss in future posts.
Growth was the problem, and more sales in our current market would certainly help with growth. But an acquisition of a competitor would not only help grow us, but potentially bring in the requisite sales talent that would then become an asset for the organization long term.
- The owner of the business was a great salesperson but hated operations. Check. We could fix that.
- They had a slew of technicians but not enough work to keep them busy. So they kept leaving. Double-check. We are bringing work with us.
- It was in an adjacent market with customer synergies to our home market. Triple-check.
But as we got to know the business more (due diligence) we found a major issue: This is the story of every relationship I have ever been in except of course with my wife Julie (married 15 years January 7th). She reads this. I have to say this stuff. Ok?
The business had major tax liabilities and the owner had liens tied to their personal possessions.
Contemplating an acquisition is similar to contemplating entering a relationship. You’re looking for compatible traits. There are always some must-haves as well as some deal-breakers. For us, in considering an acquisition, there are two things we typically need. A market manager and contractor partners. In our industry, the process to find these can take several months of iteration and investment.
One difference between an acquisition and a relationship though is the time factor. In relationships, you should certainly take your time to find the right partner. With acquisitions the longer it takes to consummate the transaction, the less likely it is to happen. You mitigate oversight of key problems by bringing third parties (attorneys and accountants) into the process.
- We brought the owner aboard as an employee and gave them a signing bonus in lieu of accounts that were bringing over. They had the opportunity to pay off some of their tax lien with that bonus.
- We brought their people on as contractor partners, establishing their relationship with us.
- We transitioned the business’ current customers, emphasizing a rebrand and a more efficient service. They would see a lot more of their favorite salesperson as we took on more of the operational activities
Acquire or Hire? Acqui-Hire! – Escape the framework trap
Like most solutions, this wasn’t some brilliant idea I came up with but rather something that the situation we were in dictated. We loved the owner and their sales prowess but hated the liabilities. To make this work, we would have to forgo standard frameworks.
Acquire: Pay a significant multiple of earning and accept all the liabilities associated
Hire: Bring on a new salesperson, without the benefit of industry knowledge and a current customer base.
The Acquihire strategy combined the best of both frameworks: The relatively cost of a hire (vs acquisition) and the accessibility to current customers on day 1.
Rookie top reads on growth strategy
This is a great resource if you’re looking to build a growth strategy from the ground up but aren’t quite sure where to start.
Key insight: Not sure what growth looks like in your industry? Look to your competitors to see what’s possible and learn from them to grow (and overtake) their market share to acquire new customers.
Summary: Going into more depth on growth strategy, the article provides a lot of important tips that help in crafting the foundation of your growth strategy to acquire new customers. Understanding your value and markets is essential as well as looking to competitors to identify and acquire new customer segments.
Looking to start building customer acquisition strategies from scratch? Then you should definitely save this Hubspot resource.
Key insight: Being flexible and open when new segments are uncovered is key to ensuring sustainable growth.
Summary: This guide has pretty much everything you need to get started, from content ideas to maintaining customer acquisition strategies over time. It offers a lot of in-depth advice as well as some real-world examples to help solidify their points.
Although geared towards startups, there’s a lot that established businesses can take away too when it comes to crafting great customer acquisition and growth strategies.
Key insight: Giving customers access to valuable content and resources is a key way to acquire and retain new customers.
Summary: Content marketing and referrals are great ways to attract new customers but it only works if you know your demographics well. Think about the ‘anchor customer’ we were referring to before and apply that to your own context using these tips. What do they find valuable and what would they like to see? Once you know your users better, it becomes easier to attract and retain new customer segments.
This guide has a lot of insight on different ways to reel new customers in, and how to keep them from leaving.
Key insight: Know your customer and don’t just stick to one channel.
Summary: It’s easy to get mired into one channel and one customer segment, but it’s important to diversify. If you have a clear USP, customer acquisition is going to be about positioning it in different ways to appeal to new customers, and providing a variety of ways for them to get involved to increase retention.