What is customer acquisition?
Customer acquisition is the process of bringing new customers or clients to your business. It encompasses the entire buyer’s journey from when they become a lead to when they convert to a paying customer.
A smart customer acquisition strategy includes:
- How to attract leads
- A plan for nurturing those leads until they become buyers
- A process for converting them into customers
- A strategy for retaining those customers
Depending on the products or services you offer, the customer acquisition process can be short or long from beginning to end. No matter how long the process takes, though, the steps for attracting, nurturing, and retaining customers are still the same.
This customer acquisition definition just touches on the process of finding and nurturing potential clients and customers. However, there’s a bit more to the process if you want to grow and optimize your business.
Why is customer acquisition important to your business?
The customer acquisition process is always relevant and serves as the backbone of any business. It increases brand awareness, sales, and referrals and helps you retain the customer base you have. For many businesses, though, acquiring new leads feels more like a game of chance. Without the right customer or client acquisition strategies, sales can be unpredictable.
The most successful companies develop strategies to attract and convert customers on autopilot, often using marketing automation. When done right, you can nurture your customers and create loyal customers or fans for life — the kind who will recommend your products and services to their friends and family.
How to measure customer acquisition
It’s important to measure and track your customer acquisition efforts to determine your lead generation effectiveness and costs. The best metrics to use will vary depending on the size of your company and industry.
Traditionally, companies engaged in shotgun-style advertising — or the “spray and pray” approach — to increase brand awareness in a large group of people instead of targeting specific demographics and attracting ideal customers. Essentially, they “sprayed” their messaging like shotgun pellets and then prayed that it would work. This marketing strategy works better for very large companies.
Many businesses take a more targeted approach in their marketing efforts, and below are the metrics they’ll most commonly use to assess the effectiveness of their marketing campaigns.
This metric measures the percentage of people who complete a process after starting it, often conducting a trial, filling out a form, or making a purchase. To leverage this measurement, you need a clearly defined “start” and “finish.” A change in these defined parameters will yield different results.
Customer acquisition cost
Many companies use highly targeted campaigns and track a lead’s progress through the customer journey, creating a great opportunity to use the customer acquisition cost (CAC) metric to analyze data. This metric can be used to calculate the cost per customer over a specific timeframe as well as for evaluating the cost of each specific customer acquisition method, like content marketing, SEO marketing, social media marketing, and email marketing. It sheds light on the success — and the return on investment — of your acquisition efforts.
One common method of calculating the customer acquisition cost involves dividing marketing costs by the number of customers acquired.
Rate of new customer acquisition
This measurement allows you to compare customer acquisition rates for various periods so you can determine if your results are improving over time. Divide the number of customers acquired during a specific period by the length of that period.
Rate of visits to specific product pages
This metric is a way to measure interactions with potential customers early in the purchasing process, It allows you to determine the effectiveness of customer acquisition channels and resources like landing pages, or blog posts and identify potential areas of improvement.
How to improve customer acquisition
Once you decide on a customer acquisition strategy, it’s important to remember that it’s dynamic and should constantly evolve as you refine your strategies. Luckily, you can do a few things to improve your customer acquisition process as your tactics evolve.
- Build customer engagement. Since most first-time website visitors won’t buy your product immediately, you need to find ways to engage with them and build trust. Social media is a great way to connect and engage with your target audience and potential customers through paid advertising (like Facebook ads and LinkedIn ads, etc.) and organic social posts on the social channels your audience is likely to view.
- Minimize spending. Usually, you can find creative ways to reduce spending without affecting marketing results, such as automating parts of the process and repurposing content, like videos and blogs.
- Educate your prospects. The best way to win more customers and improve customer loyalty is to address their pain points and educate them. You can do this by sharing free, helpful information that solves their problems. This will also improve your website’s search engine optimization (SEO) and increase organic search traffic to your website.
- Develop partnerships: You can reap the rewards of collaborating with a complementary brand to promote your business and theirs. Co-marketing can include sharing white papers, infographics, webinars, podcasts, and more. It’s a win-win for both parties.
Customer acquisition and retention
Studies show that it costs 6 or 7 times more to acquire new customers than it does to retain them. So it stands to reason that it’s critical to the overall success of your company’s growth efforts that you develop an effective retention program as well. Without this, your business’s survival might be threatened. Plus, you’d miss out on the potential for increased profits that result from increasing customer retention by as little as 5%.
Customer acquisition efforts are important to the long-term success of your business. Remember to routinely measure your results and track related costs to ensure continuous improvement. Update your strategy on a regular basis and be sure to include a retention strategy to maximise your company’s growth.
Learn more about Customer Acquisition:
- How to calculate your customer acquisition cost
- A guide to your customer acquisition strategy
- How to create a customer acquisition funnel template
- Why all businesses should calculate customer acquisition costs
- Customer lifetime value calculation: a key business growth metric
- What is the LTV:CAC ratio and how can you calculate it?
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