What is Customer Acquisition?
Customer acquisition involves identifying and targeting potential buyers, supporting them through the sales funnel, and then converting them into paying customers. Customer acquisition strategy should be ongoing and systematic. It must also be responsive to changes in the market and new trends.
Why is Customer Acquisition Strategy Important?
Companies need to continue to grow in two ways if they want their businesses to be viable and competitive. First, they need to convert and acquire new customers. Second, they need to convince existing customers that they are more capable. A well-executed and well-understood customer acquisition strategy can help you save money. Maximize your ROI by targeting the right leads and delivering relevant messages at the right time.
The core elements of a customer acquisition strategy
There is no one-size-fits all approach to developing a customer acquisition strategy. The strategy should still be specific to the business and its target audience.
Integrating Business Strategy/Goals
The definition of success and the metrics to measure it should be determined from the beginning. The company’s history and impact on growth should be considered by leaders when setting goals for campaigns and business. This includes the percentage of new revenues that can trace back to marketing efforts as well as industry benchmarks.
Customer churn should also be taken into consideration. It can be difficult to drive growth if there is high churn. Customer acquisition campaigns must compensate for any losses. A customer retention strategy may be able to ease some of that pressure. It allows you to set realistic and achievable goals for customer acquisition.
Finding the Right Acquisition Channels
An assortment of channels can be used to execute a customer acquisition plan. A few examples of customer acquisition strategies include content marketing and SEO optimization. Also trade shows, email, mail and/or social-media campaigns.
Test a wide range of channels to find the best value. A CAC is a way to determine their relative performance, customer acquisition cost, and other factors. Further details are available below.
The Customer Acquisition Funnel – Stages
The customer acquisition funnel at the top is very wide. Cast a broad net to get as much attention and as many interest as possible. The net becomes smaller as less-qualified leads are lost and the brand guides those prospects toward a sale.
Customer acquisition strategy
Awareness: New customers and audiences are likely to be introduced to this brand. Through marketing efforts or independent research.
Interest: Brands can differentiate themselves or their products by educating consumers. They resolve their emotions through smart or resonant messages.
Think about it: Potential customers visit the site, download content and sign up for a free trial. Then they can better understand the brand, its products and services.
Intent: Prospects work their way up the funnel, closer to making a purchase. They do this by watching product demos and adding products to their shopping cart.
Evaluation: Brand engages them in more detail in response to recent activity. The prospect begins to think about the benefits and costs involved in completing the transaction. Another option is to choose a comparable brand/product or doing nothing.
Purchase: Prospects become customers after they complete a transaction. Companies may also be able to reward loyal customers with cross-sell opportunities, upsells, and loyalty rewards.
How to Create a Customer Acquisition Strategy That Works
A business has a wide range of options when it is time to plan a customer acquisition campaign. Setting priorities can help ensure efficient marketing spend.
1. Ask the right questions ahead
You should ask key questions about customer acquisition planning, such as:
Who is our ideal client (target persona?)?
What are your business goals (brand awareness and leads, conversions, revenue increase)?
Which channels will we use in order to generate interest or demand?
How can we measure campaign effectiveness?
Strategistical planning works best when it involves multiple team members, including leadership, marketing, product design, and sales.
2. Optimize web pages for organic searches
Being found online is an important component of a customer acquisition strategy. You can improve website traffic by publishing old content, updating it with new links and information, and revising it. You should determine what content is receiving the most clicks and why. For instance, which industry, feature, and/or location-specific queries brought people to this page?
3. Prioritize social media advertising and engagement
Social advertising presents unparalleled (and relatively cheap) opportunities to raise brand awareness, engage prospects and develop brand communities. Social media users are very open to advertisements and campaigns. Marketers can also target the right audiences and track the performance of ad/campaigns in fine detail.
4. Consider a range of channels
Cross-pollination is the seeding of ads on multiple channels. It benefits companies in two different ways. You makes sure that the total customer acquisition effort isn’t sunk by one underperforming ad. It delivers better results for marketers.
5. Invest in quality creative
Only the quality of your creative assets can make a customer acquisition strategy effective. Even if it’s well-planned. Images and videos that aren’t clear enough to make a difference in the clutter can only be a drain on resources. Negative images are especially harmful to the brand. For social advertisers looking to increase signups, sales, downloads, or purchases, high-quality creativity has become increasingly important in recent years. Because of the introduction tiered managed services, it is now more affordable than ever.
6. Incorporate video whenever you can
Video marketing is used by over 80% of businesses to engage, inform and entertain their customers and prospects. Videos can tell customers’ stories and brand stories. Incorporate Videos can help educate customers by showing them products in action and demonstrating how to use them. Videos can trigger emotions and become viral quickly. You should make the video a focal point of your social advertising campaigns.
7. Create optimized ads
Through quantitative creative testing, social marketers are able to constantly refresh and improve their advertising creativity. This involves testing and changing various elements of winning ideas to determine their effectiveness. The elements included in this process include the ad copy, colors CTAs, and images as well as video length. Based on more than $1 billion in ad sales on Facebook, Instagram, Google, and Google, our research has shown that it’s the most cost-effective and efficient to create new ads only 80 percent of all the time while focusing the remaining 20 percent on developing completely new concepts.
8. Ads for Leverage
Paid online ads are a huge business. They accounted for more than $111billion in 2018 and will overtake traditional media advertising in 2019. Both search and social media ads can drive traffic and are relatively inexpensive means to acquire new customers. Advertisers have the option to either pay per impression, CPM or pay per click depending on their priorities and campaign budgets.
9. Partner with other companies
Co-branding is a great way to achieve amazing results, such as Bonne Bell’s Dr. Pepper Lip Smacker (introduced 1975) and Uber/Spotify’s “soundtrack of your ride” campaign. Companies can pool resources, leverage their influence and customer base to fill the sale funnel. They make customer acquisition a collaborative effort.
10. You might consider a referral program
Asking customers for referrals and offering discounts to both is an inexpensive way to go. It’s also highly efficient. Referral programs were an effective way for young startups such as Dropbox and Airbnb to generate multibillion-dollar growth.
11. To be helpful and transparent
Keep your branding messages and product information simple. Calls to actions should be clear and offer both a path and a benefit. Finally, social proof can be used wherever it is possible.
12. Focus on sustainability & flexibility
It is important to have the resources available to plan, execute, adjust, and modify customer acquisition campaigns and strategies. Establish systems for content production for ongoing inbound marketing efforts. Also, you should be ready to change tactics or market conditions to meet consumer expectations.
What is Customer Acquisition Cost?
Customer acquisition cost (CAC), also known as the cost of acquiring a customer, is the total cost. CAC is used for calculating ROI for all types customer acquisition initiatives. These initiatives include traditional marketing, advertising, and digital marketing campaigns for community events. The more customers are acquired through a channel/method that has a lower CAC, the greater its business value.
Divide total marketing spends by number of customers acquired to calculate CAC. Here is the complete equation:Customer acquisition strategy
- CAC = (MC+W+S + OS + OOH) / CA
- MC = marketing costs
- W = salaries for marketing/sales staff
- S = marketing/sales technology
- OS = outsourced services
- OH = marketing overhead
- CA = Total number of customers acquired
For calculating CAC for an initiative or campaign, you can simplify the equation (CAC =MC /CA).
A customer acquisition budget (an “allowable CAC”) is based on customer lifetime value (LTV). Customers who spend more often may require a higher CAC.
An ideal LTV/CAC ratio is 3:1 or better. But a ratio higher than 5:1 could indicate that you’re not investing enough in customer acquisition and may be missing out on growth opportunities. Tracking related metrics might help to place the LTV:CAC ratio in perspective. This includes customer growth, customer turnover, and monthly revenue growth. It is the monthly increase in customers.
How to optimize customer acquisition costs (CAC).
Optimizing your campaign for CAC doesn’t always require major campaign overhauls. Here are some easy tweaks and strategies that can reduce customer acquisition costs.
Optimize the path from conversion: Take a hard glance at your website landing page and CTAs. Do they convert well? Do you have any ideas for improving layouts, copy, or concepts? Use A/B testing data in order to make definitive decisions and fine-tune the online presence.
Reward loyal customers by becoming brand ambassadors. Encourage and reward customers who already have a relationship with the brand to promote it via social media channels. Ask them to share contests. You can ask them to share these contests, coupons, giveaways, surveys and more within their own social media networks.
Try something new. Look into new channels and methods to increase your spending power.
Avoid the High Price of Going It Alone
An effective customer acquisition strategy will have the highest chance of success if it draws on world-class creativity and social marketing expertise. These capabilities and strengths allow companies to respond quickly to changes in the industry and consumer preferences. Also, it is possible to preserve resources and maximize gains.