Customer acquisition is the process of bringing new clients or customers to your business. It encompasses the entire buyer’s journey, from the time they become a lead until they become a paying customer. So, depending on your product or service, the acquisition process may take a long or short period of time from beginning to end. Regardless of length, the steps of attracting, converting, closing and retaining customers should all be covered by your strategy.
How to measure customer acquisition
It’s important to measure and track your customer acquisition efforts to determine effectiveness as well as costs. The best metrics to use to assess how to improve your customer acquisition efforts will vary by industry. However, there are a few that are commonly used by businesses to help adjust strategies to increase results. These are a great starting point:
- Conversion rate is a common growth metric. It measures the percentage of people who completed a process after starting it. To leverage this measurement, be sure to clearly define what you consider the “start” and “completion” of a given process. For example, when measuring the conversion rate for e-newsletter registration, what two events will be your “start” and “completion”? Are you quantifying the percent of website visitors who completed a registration form or the portion of those who arrived at the registration page who completed it? Obviously, these would yield two different rates.
- Customer acquisition cost (CAC) is a very common metric used to assess the effectiveness of your customer acquisition efforts. It can be used to calculate the marketing cost per customer acquired for a period of time as well as for a specific marketing method being used. This can be used to determine the success of your overall acquisition efforts. Plus it can help determine which strategies are producing the best results. A common method to calculate customer acquisition cost involves dividing marketing costs by number of customers acquired.
- Rate of new customer acquisition allows you to compare customer acquisition rates for various timeframes so you can determine if your results are improving over previous periods. It is calculated by dividing number of customers acquired over a period of time by the length of the same period.
- Rate of visits to specific product pages is a way to measure interactions with prospective customers early in the purchase process. It allows you to determine the effectiveness of these product or landing pages and identify potential areas for improvement.
How to improve customer acquisition
Once you create your customer acquisition strategy it’s not static. It should continually evolve as your product, company, marketplace, competitors, buyers and marketing trends change. A few things you can do to improve your customer acquisition results are:
- Build customer engagement because most first-time website visitors won’t simply buy your product. Engaging them will allow you to build trust as they get to know your brand. Social media is a great way to connect with and engage your prospects and customers.
- Minimise spending without reducing results. For example, instead of hiring a large sales team, automate as much of your marketing process and lead nurturing as possible.
- Educate your prospects by sharing lots of free, informative content to aid in their decision to do business with your company. Offering social proof through customer testimonials is another way to educate them, build trust, and increase new customer conversions.
- Develop partnerships where a complementary brand promotes your brand along with theirs and you reciprocate. Co-marketing can include shared content such as infographics, white papers, webinars and podcasts, to name a few. It’s a win-win scenario where both companies benefit.
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 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.