Customer Acquisition Strategies: why, what, how?


What is customer acquisition?

In a nutshell, the customer acquisition process is the practice of bringing in new clients or customers to a business. Research shows that 44% of companies admit to having a greater focus on acquisition than retention. If this is also your business' objective then it’s important to have a sustainable acquisition strategy in place that returns positive results on investment (ROI) and positions you as a more attractive choice over your competitors.

What is Customer Acquisition Cost?

To develop a solid acquisition strategy that has a decent ROI rate you need to understand your Customer Acquisition Cost (CAC). Without this, your business will be flying 'blind' and no doubt ploughing money into marketing activity that doesn't generate a good return.

The cost of acquiring new customers has increased by 60% in the past five years. This increase is simply because marketing costs have risen and that’s because customers now demand much more from the brands they choose to buy from.

The pandemic has paved the way for a new breed of consumers too, and they need to be marketed to in a more costly way. For example, they may demand more personalisation, expect a certain level of customer experience when they buy products and services, or they may want to see a focus on sustainability which means using eco-friendly marketing that often incurs a higher cost to a business.

However, despite the rise in costs, this new consumer behaviour has opened more opportunities for companies to utilise, both for current customers and new ones. With the right strategy, brands can capture customer attention, drive engagement, and increase sales conversion, all while driving customer loyalty among the existing audience.

How to calculate Customer Acquisition Cost

Customer Acquisition Cost is the calculation of what it costs a business to attract the interest of a potential customer and convert them into a paying customer.

The formula to find out your CAC is:

 

The expense of the sales and marketing invested

 

 

divided by

 

 

The number of new customers that sales and marketing has secured

 

The CAC is often of significant interest to stakeholders, shareholders, VCs, and investors and will determine whether they believe in your business model (or not).

How to create a customer acquisition strategy

As soon as you have a product or service that can be marketed to the paying public, you’ll need to consider the customer acquisition process and implement a strategy. This step is essential for every business model and always starts with developing your marketing sales funnel.

But before you get into your sales funnel, it’s vital that you’ve identified your target audience, the communication channels where you can capture them and their typical buying cycle and journey.

Understanding all of this information will inform your customer acquisition strategy, as you’ll then know:

  • who you're targeting
  • where you're targeting
  • and how often you need to target them.

Step 1: Identify your target audience

What is the problem you're solving? Who needs your product or service? Are you targeting men, women or both? Are they interested in sport? Do they have children? What age are they? These are all the questions that need to be asked. It’s crucial to understand who you want to target before you can consider where you’ll reach them to enable you to focus your customer acquisition efforts.

Step 2: Select the appropriate channel

Marketing channels are the tools and platforms that brands use to communicate with their identified target audience.

Back in the day you could count the channels to choose from on one hand – but now it’s a different ball game. In today’s world of digital media dominance and 24/7 accessible social media, marketing needs to encompass a mix of channels and they must work in synergy to create an aligned, consistent and seamless experience.

Choosing the right channel is crucial so it may take a bit of experimenting and evaluating. It’s good to have KPIs set for each activation to ensure the activity delivers a return. If it doesn't, change it.

Step 3: Trace your consumer's journey

Regardless of the type of business you’re operating, acquiring customers typically goes through a 'marketing funnel' process. This concept was developed around 100 years ago and later became simplified by a marketing acronym known as AIDA.

The AIDA model follows the progression of shoppers throughout their buying journey.  The customer acquisition part refers to the whole process – acquiring the customer’s awareness, interest, desire then action. It is all part of customer acquisition and different techniques should be implemented to guide the customer through each phase.

Awareness

The first question the business’ marketers need to ask is ‘how can we attract the attention of our target audience?’. Think about what they watch, read, listen to, where they go, what they do and then you can move on to the next part.

Interest

At this stage you know where you need to put your marketing and advertising spend in terms of channels and mediums but now consideration must be given to how you grab the potential customer’s interest.

Desire

The customer is aware of you, they are interested in you but now the job is to convince them that they want you. The objective here is to progress the customer’s mindset from interest to desire. 

Action

And this is the clincher! The moment the potential customer becomes more than just a lead. The moment they put their hand in their pocket and buy from you.

The seven customer acquisition techniques to implement

Now your customer acquisition strategy is clear, it’s time to look at the techniques you can use to get their attention, engage them and turn them into paying customers.

Here are seven customer acquisition tactics proven to do all of these things:

1. Video content

According to experts, 92% of marketers who use video say it’s an important part of their market strategy. With game-changing technology offering increasingly impressive video resolution formats, video marketing is providing brands with some incredible opportunities when combining this method with traditional marketing campaigns. Using video is a creative and impactful way to influence an audience and provide potential customers with a memorable experience.

Psychologist Albert Mehrabian agrees: he found that 93% of communication showing feelings and attitudes to something, is done nonverbally. This means when you're listening to something you're going to find more meaning watching body language (55%) over the actual words being spoken (7%).

That’s why brands should be multisensory in their approach to customer acquisition. When customers are visually and aurally engaged with a brand's messaging a connection is formed.

2. Incentivise prospects to choose you

Using incentives for prospective customers to encourage them to buy from your business can be more effective in conversion than offering discounts, which can have an impact on the bottom line.

At Blackhawk Network we help businesses design reward-based acquisition initiatives that strengthen their brand and stand them out from the crowd.

One example is using cost-effective digital rewards  that enable brands to offer a user-friendly way for prospects to redeem ‘new customer rewards’ in seconds. Businesses can then track their new customer’s journey to gain insight and a better understanding about what prospect's want.

There’s also the opportunity to connect your incentives journey to other parts of your brand’s customer experience. For example, creating more personalised offers to boost loyalty and satisfaction rates even further over time.

3. Develop a pipeline of content marketing

This refers to a marketing approach which involves creating, publishing and sharing content online for a targeted audience. The content could be videos, blogs, email marketing or social media posts that do not explicitly advocate a brand but rather aims to draw attention and stimulate interest – the first two parts of the AIDA model.

According to Hubspot, brands that offer blog content on their site have 434% more indexed pages than businesses without it. Remember, as you publish more content, Google will continue to rank your site making it easier for customers to find you. Particularly effective when you know that almost half of 18–49 year olds get most of their media consumption online, so make sure you appear where they are looking.

4. Invest in SEO

In an ideal world content marketing draws attraction and sparks interest in new customers, but you could make your content work even harder for you by investing in SEO techniques to get your content ranking high on search engines.

As discussed above, content is an effective way to attract customers in their buying journey, tapping into the awareness and consideration stages of their online browsing. However, without a good SEO strategy behind your content, it will be difficult for Google to approve your work, which in turn will make it hard for prospects to find your work.

5. Mobile optimisation

Almost every adult in the UK owns a smartphone, and around 95% of those smartphones are used daily. Optimising your website for mobile devices is particularly crucial if your audience is consuming its information that way and more importantly buying that way - sales from mobile devices beat pre-pandemic highs by 47% last Christmas to hit £19.8bn – wow!

Having a website optimised for a mobile phone can become the deal breaker. Doing something as simple as providing your prospects with an enjoyable, user friendly, simple mobile experience can secure a prospect converting to an acquired.

6. Social media marketing

There are an estimated 3.6 million people with profiles and access to social media worldwide which provides brands with a variety of channels that can reach segmented audiences far and wide at all times of the day and night. Whether it’s Facebook, Instagram, TikTok or Twitter, brands can have consistent presence everywhere and this is a great way to use video content as we mentioned earlier, to  create engagement

Brands can use social media either organically or as sponsored posts:

  • Organic social posts — these are posts that aren’t sponsored and paid for. They can be pre-planned and scheduled or posted in the moment. The latter is ideal for Instagram stories.
  • Paid for posts – these can be executed by way of a sponsored post or by creating a visual ad and they can be targeted to find new customers in new markets or in new locations or to target potential customers that didn’t buy.

7. Referral programme

It's fair to suggest that everyone has probably heard the phrase ‘refer a friend and get a discount on your next purchase’ and it’s because referral programs are a relatively cost-effective and easy way to increase customer acquisition. The CAC is relatively low and recommendations from friends and family to use or try something can be persuasive.

It's been reported that referred customers’ lifetime value is 16% higher when compared to non-referred customers.

Conclusion

Whether businesses should focus their marketing investment on acquiring new customers or nurturing existing loyal customers remains to be debated. But what businesses must not argue is the value of a solid customer acquisition strategy.

Interested to chat about how we can support your business with its customer acquisition strategy? Give us a call on 0207 419 8191 or get in touch here.

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