What is Customer Acquisition? 6 Successful Strategies for 2021
The world is a more virtual place. More meetings and events are moving online every day, and the pace at which people consume information digitally is increasing by the minute. While it may seem like this move online lowers marketing costs, it actually causes the competition and stakes to become higher.
Compared to an in-person event, online events do not generate the same amount of engagement. They don’t significantly strengthen relationships or add to the pipeline either. Plus, every marketer is planning their digital spending (or already has). This increased online presence across the board only makes it harder and harder for businesses to stand out and acquire the right customers.
We are living in an unprecedented time, calling for unprecedented marketing action. If your business has not revamped their customer acquisition strategy, now is the best time to do it. In this article, we will discuss: the fundamentals of customer acquisition and why it’s important, how to build a successful customer acquisition campaign, and how to measure your progress and iterate on your results.
What is Customer Acquisition?
Customer acquisition is the method by which companies draw in new customers or clients. Customers feed a business; without them, companies cannot grow to their full potential. Cost-efficient and effective customer acquisition is critical for any company.
Of course, developing a killer customer acquisition process is easier said than done. Identifying the most impactful marketing channels may be easier for companies that collect a substantial amount of customer data, but balancing the cost to acquire customers with the return on investment is tricky.
Customer Acquisition Funnel
The best way to conceptualize customer acquisition is through stages of a funnel. The first stage of this funnel is dedicated to creating awareness. Before prospects can even consider a purchase, they need to know what your company does. Companies foster awareness through social media, blogging, or direct mail.
Once a potential customer understands what your company brings to the table, he or she will begin to weigh the pros and cons of your offering against other competitors. At this consideration stage of the funnel, case studies, testimonials, and white papers can help convince prospects of the value of your product or service. The last stage of the funnel is directly tied to a customer’s decision to purchase.
Converting a customer requires dedication and thought in all three stages of the acquisition funnel. For example, Terminus used personalized one-to-one ads to gain the attention of specific company leaders. Once a prospect engaged with Terminus material, they were added to a drip campaign that sent them information on what Terminus software does and the ROI on a potential investment. Terminus even sent prospects cupcakes! As a result, they achieved a 13% conversion rate and significantly lowered the cost of creating an opportunity.
The Best Customer Acquisition Strategies for Your Business
Finding the right combination of customer acquisition methods can make or break your customer acquisition strategy. Below we discuss several common customer acquisition techniques, from social media, to email, to direct mail. Mix and match these approaches to find the perfect blend for your business.
- Content Marketing: Producing free content—whether that’s in the form of a checklist, template, or video—is a fantastic way to grab a potential customer’s attention. Be sure to understand your audience and publish content that enhances an aspect of their daily life or work. Putting out irrelevant content can backfire. Content marketers should give away something that prospects will actually find helpful and persuade them to make a purchase.
- Social Media: Organic social media can help instill trust in your products and services. If you establish a trusted online presence, your followers will spread awareness about your brand for free. Not only that, you can leverage organic social media to highlight new products or features, company culture, or altruistic initiatives.
This all sounds great in theory, but growing an organic fan base takes a great deal of time and patience in practice. Paid social media may be a faster way to expand your reach. With a higher budget, you can pay to ensure your posts or ads are seen by the right buyers. In addition, some forms of paid social media gather prospects’ email addresses and names you can use for future campaigns.
- Mobile: These days, everyone consumes information on their phones. Make sure that your website and any marketing content is just as beautiful and readable on a tablet or smartphone as it is on a desktop. Blogging is a popular way to reach consumers who often read on their phone. You can gain prospects’ trust by writing about problems your company is uniquely positioned to solve. Writing on thought-provoking topics grabs readers’ attention and allows you to become a thought leader in your space.
- Email: Content marketing and paid social media can provide you with a substantial list of emails. This list is lead-generating gold. Use these emails to your advantage—wish your prospects a happy birthday, remind them of upcoming promotions or events, or send them free content.
Be sure to send emails to your subscribers based on the information you have. Take into account the channels they use to interact with your brand, the area of your website they spent the most time on, and what they purchased in the past. For example, you might notify existing customers of recommendations for a product they might like and don’t already have. On the other hand, you might send new customers a list of innovative ways to use the product they just bought.
- Video: Although video seems daunting, it is one of the best ways to convey the value of your product or service. You can record demos that show all facets of your product, interview real customers for testimonials, and educate your customers and prospects on best practices. If expense is an issue, you can write scripts yourself, hire freelancers, or start with cheaper cameras. That said, video is still among the more expensive customer acquisition methods, so use it to showcase your finest content.
- Direct Mail, Gifts, and Swag: While direct mail or gifts may feel old school, it is still a robust customer acquisition tool. Most marketers have shifted to online modes of communication, leading some people to delete a majority of their emails without even reading them. Direct mail has a few things going for it in this regard—it is memorable, has a better response rate, has less competitors, and allows for creativity.
Think about the last hand-written card or flowers you received in the mail. You appreciated the thoughtfulness and remembered the gesture. There are very few companies who can afford to spend on physical mail, so make your mailing fun and easy to act upon.
How to Calculate the Cost of Customer Acquisition
Acquiring customers doesn’t come for free. Customer Acquisition Cost (CAC, for short) is a measure of the marketing costs associated with a campaign per acquired customer. You can use CAC to gauge how economical your marketing efforts are.
The Customer Acquisition Cost Formula to Use
The back-of-the-envelope CAC calculation is simply: marketing costs (MC) divided by the number of customers acquired (CA), or CAC = MC / CA. This is a quick and easy way to evaluate the effectiveness of a particular campaign.
The more costs you incorporate in your MC, the more accurate your CAC becomes. For example, you could just consider the cost of Facebook advertisements as your MC, or your MC could include the cost of the Facebook ads plus your salaried marketing employees creating and managing the ads, your marketing software, and any outsourced services. A more in-depth CAC calculation is used to evaluate your marketing team on the whole for a particular period of time.
How to Reduce Customer Acquisition Cost
All companies want to limit their spend as much as possible, particularly during the ambiguousness of COVID-19. At the same time, you want to ensure that you are still attracting top customers to your platform. There are several best practices you can implement to strike an appropriate balance.
Always remember to maximize the chances of a prospect converting. This could mean making your website more mobile-friendly, jazzing up your copy, or writing more powerful calls to action. Leverage A/B testing to make sure the marketing decisions you’re making are actually working.
Also, don’t forget about the customers you already have. Existing customers are likely passionate about your products or services and are more willing to buy your newer or enhanced offerings. Don’t be afraid to tap your best current customers for recommendations or referrals.
Last, but not least, take a hard look at every part of your customer acquisition strategy. Use metrics to see if you can afford to spend less on a certain channel or use less external resources. Do a little research to see if you can achieve similar results with cheaper vendors.
How to Improve Your Customer Acquisition Campaign
Crafting marketing campaigns do not come cheap, so try to make sustainable investments that will continue to be profitable over the long run. This could mean hiring the best copywriters, buying camera supplies, or purchasing the best software for your acquisition needs.
That being said, customer acquisition campaigns must be flexible enough to incorporate ever-changing trends in sales and marketing. Campaigns should also take into account the difference between “good” and “bad” customers. Tailoring to “good” customers who will continue engaging with your brand and buying new products could ultimately earn you more revenue than acquiring the average person.
Just like CAC, there are benchmarks you can use to assess your customer acquisition effectiveness. One is customer Lifetime Value (LTV), which reflects how much a retained customer is worth to your company. While high LTV customers are often more expensive to acquire, they supply the greatest value over time.
The ratio of LTV to CAC underscores how well or poorly a company’s customer acquisition strategy is performing. The more customers who are “one and dones,” the worse your LTV to CAC ratio will be. By the same token, the higher your customer’s LTV to CAC, the more revenue you can anticipate.
It is one thing to acquire a customer, but retaining them may require a completely different strategy. When a company loses customers, they have to spend even more on acquiring new customers. Investing in expansion and retention tactics can reduce churn and attrition, and help you derive the most profits from the customers you already have. When your existing customers are happy, they are likely to become repeat purchasers, and will probably share their positive experience with other prospects.
Start Tracking Your Acquisition Process
Maximizing your efforts to draw in profitable leads while minimizing cost is key to a successful customer acquisition strategy. A proven track record of converting prospects into customers allows you to reinvest in your company and show your partners and investors that your product or service is worth their time and attention. But finding your groove requires experimentation and measurement.
Start your experimentation with Sendoso, the leading Sending Platform. In the past, sending direct mail or gifts was a very manual customer acquisition campaign. You have to find customer mailing addresses, consider packing materials, and write individual, personalized notes. Sendoso streamlines this process, making it easy to send customers specialized, unique sends that are bound to catch your ideal prospects’ attention, build relationships and acquire customers.
In fact, direct mail campaigns are 40% more likely to achieve high acquisition levels, and Sendoso users have seen 5x higher close rates as a result. Download a free direct mail guide to learn more, or request a demo today.