By: Mary Rose Sutton
Introduction
Whether you’re a new entrepreneur trying to attract your first 10 customers or an experienced professional seeking to gain your 10,000th customer, customer acquisition never ceases to be relevant.
However, for many business owners, selling can be unpredictable, and they may find it challenging to acquire new customers.
If you want to grow your business continuously and profitably, you should think of customer acquisition not as an end result but as a process – a process that considers how you can systematically gain new customers, the cost of bringing them to your doorstep, and how much money each of them will spend with your business.
What is Customer Acquisition?
Customer acquisition is the process of finding potential customers and persuading them to purchase your products or services in a measurable and repeatable way – not randomly. Examples of customer acquisition include email marketing, using a Customer Relationship Management (CRM) system, and providing superior customer service.
Customer Acquisition Channels
Companies use customer acquisition channels to reach out to their targeted ideal customers. You can leverage these channels at all customer journey touchpoints to invigorate your customer acquisition methods.
Common channels for customer acquisition include:
- Your website
- Your blog
- Email marketing
- Events
- Organic social media
- Paid advertising
- Customer support
- Referrals
The Customer Acquisition Process Flow
Whether you sell wholesale or directly to consumers, you need a strategy for customer acquisition. Customer acquisition occurs in stages, which are often visualized as a customer acquisition process flowchart:
- Top of the funnel (Awareness). In this stage, your goal is to generate awareness and leads among your target audience. You usually focus on a broad and wide audience that may be interested in your company’s brand or products but has no specific intent to purchase.
- Middle of the funnel (Consideration). Prospective customers moving from the top of the funnel to the middle typically take some action, such as signing up for an email list or following your brand on social media, indicating that they are considering a purchase. Now you need to persuade them to become customers.
- Bottom of the funnel (Purchase). This is the final stage a potential customer goes through before converting to a customer. They have likely taken some actions that indicate a strong intent to purchase, whether it’s adding a product to their shopping cart or signing up for a free trial. Companies often send incentives, such as a discount code, at this stage to convert near-purchase prospective customers.
Customer Acquisition Methods
There are many different methods businesses can follow to find new customers and convert them, especially online. Through digital marketing, it has become easier to track how new customers acquire your business, discover and test new marketing tactics, and scale those that work.
Customer Acquisition Strategies to Try
Here are some customer acquisition strategies you can use to grow your business and how to prioritize them:
1. Run Pay-Per-Click (PPC) Ads
One of the most common ways to acquire new customers is through online advertising. The reason many e-commerce brands turn to Facebook, Google, and other platforms to run ads is that they provide comprehensive tracking tools that allow you to optimize your ads and get the most out of your budget.
2. Collaborate with Influencers
If you have a marketing budget, one of the quickest ways to showcase your product or brand to a targeted audience is to pay someone with an online following to promote it on your behalf.
3.
Running Email Marketing Campaigns
Gathering email addresses is one of the best investments for lead generation to acquire customers due to the revenue that email marketing generates for businesses.
4. Launching a Referral Program
A personal recommendation from someone you know goes a long way. People trust those they know, so when a friend tells them to check out a new product or brand, they listen.
5. Investing in Traditional Advertising
Harvard Business Review predicted that consumer-targeted companies would increase spending on traditional advertising by 11.7% over the next year.
6. Improving Your Search Engine Visibility
When searching for a product or service, many consumers start by searching on Google. Creating website content that helps your brand appear in Google search results for relevant queries is known as Search Engine Optimization (SEO).
7. Focusing on Audience Building
With social media and its various platforms like Facebook, Instagram, YouTube, and Twitch, individuals can attract a large online audience of potential customers.
8. Launching a Blog
An engaging and thought-provoking blogging strategy can help build trust with potential customers, strengthen customer relationships, and promote your products and services.
Calculating Customer Acquisition Cost (CAC)
Every new customer acquisition comes with a cost that can be calculated based on the marketing effort spent to acquire them. To know if your customer acquisition efforts are working, you’ll need to understand how to calculate your Customer Acquisition Cost (CAC).
The customer acquisition cost is the total marketing cost divided by the number of customers acquired.
For example, let’s say your Instagram page brings in 50 customers a month and you spend $500 on content creation. Your customer acquisition cost would be $10:
Marketing expenses ($500) / New customers (50) = CAC ($10 per customer)
The reason companies calculate customer acquisition cost is to determine if their marketing approach is profitable. Using the example above, if each customer spends an average of $50 on their first purchase from your business and your profit margin on each order is 50%, your profit would be $15 per order.
Average order value ($50) × gross margin (50%) – customer acquisition cost ($10) = profit ($15)
For brands with a higher lifetime value (LTV), it may not be profitable for customer acquisition cost to be profitable on the first purchase. If your customer data tells you that the customers you acquire are likely to continue purchasing from your brand after their first purchase, you may be able to afford spending more to acquire each new customer.
Customer Acquisition Tools
There are numerous tools that companies can use to assist in customer acquisition. Here are some examples:
- Referral Candy: A tool for building referral programs for your store.
- Shopify Inbox: A free app that helps convert browsers into buyers through chat.
- Shopify Email: An email marketing app specifically designed for e-commerce stores.
- Privy: A popular app for conversion optimization, growing subscriber lists, and increasing sales.
- Booster SEO & Image Optimizer: An app dedicated to optimizing your Shopify store for search engines.
Creating a Successful Customer Acquisition Strategy
When it comes to achieving growth and expansion in your business, acquiring new customers plays a significant role. Customer acquisition is about understanding how customers discover your brand and why they buy from you, so you can enhance the customer experience. This will allow you to spend your marketing dollars more strategically, improve customer lifetime value, and grow your business sustainably over time.
Knowing
The channels that will serve as tools for customer acquisition for your business involve testing channels and continuous experimental approaches, allowing you to discover what works best for your unique business and preventing you from heavily relying on a single source.
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Frequently Asked Questions about Customer Acquisition
What are the three parts of customer acquisition?
Top of the funnel, middle of the funnel, bottom of the funnel.
What are the types of customer acquisition?
There are three main types of customer acquisition: organic, paid, and referral. Organic involves unpaid methods such as search engine optimization and social media marketing. Paid includes social media ads, pay-per-click ads, and display ads. Referral involves influencers and word-of-mouth marketing to attract new customers.
What is an example of customer acquisition?
An example of customer acquisition is when a company uses various marketing tools and strategies to attract new customers and convert them into paying customers. This can include offering discounts, running ad campaigns, creating landing pages to capture leads, and more.
What is the difference between customer acquisition and customer retention?
Customer acquisition refers to the process of finding new customers and converting them. Customer retention occurs after acquiring the customer. A high retention rate means that customers stay for a long time and continue to purchase from you.
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