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Customer Acquisition: A Guide for Businesses

One of the most important parts of building your business is getting your product or service in front of people who want it. Understanding the customer acquisition process can assist with this, providing multiple ways to help you generate new and repeat business. The way you approach customer or client acquisition, however, can impact the revenue your business generates, so choosing effective methods may help you focus valuable energy on what works best. You can use the information in this customer acquisition guide to develop a deeper understanding of how to grow your business.

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What is customer acquisition?

Customer acquisition is the process of getting new customers to make purchases from your business. The overall goal of this process is continuously generating new customers through marketing and advertising your business or providing unique selling points and buying incentives. Business owners take a variety of approaches when implementing customer acquisition strategies, including social media campaigns, publishing authoritative content to spark customer interest and offering discounts for people who refer new customers who make a purchase.

You can track and measure several of these approaches to customer and client acquisition more easily than others—for instance, social media insights versus word-of-mouth referrals. KPIs such as conversion rates from funnel pages can also help you maintain and evaluate your strategies.

The customer acquisition process

Customer acquisition can involve a variety of tactics and marketing strategies that work to gain interest and bring new clients to your business. The process starts with performing market research to identify specific needs or problems your products or services can solve. Then, using this information, your marketing team can develop low-cost strategies for getting your products or services in front of the right audience.

For example, one approach is to combine a social media ad campaign with a click funnel to gather potential customers’ email addresses. This lets your business send correspondence and educate your market about your offerings. After doing this, you can analyze the amount spent on social media ads and the cost of designing and integrating a funnel page, and then track the performance of each strategy to monitor its effectiveness.

Examples of customer acquisition

Customer acquisition strategies can differ depending on the type of goods or services your business offers. For instance, when providing a service like financial consultations, it might involve implementing marketing strategies that place your offerings in front of target markets, such as people seeking retirement strategies or looking for somewhere to park newfound wealth. In contrast, clothing manufacturers might focus their marketing strategy on retailers that sell the items they produce. These scenarios also illustrate how a business might approach customer acquisition:

  • Acquiring clients through social media campaigns that place service discounts, referral codes or special offerings in front of target markets.
  • Email campaigns aimed at customers who’ve expressed interest in learning about a company’s product by filling out a form within a sales funnel.
  • Engaging a target audience through social media, live chat or a personalized email to build community and find ways to fulfill market needs and boost customer loyalty.

Benefits of customer acquisition

Customer acquisition comes with several benefits. First, bringing in new customers essentially leads to generating more revenue, which can help increase your business’s profitability. Second, successful customer acquisition can offset marketing costs through increasing revenue. Additionally, new customers may spread the word about your company and encourage others to try your products or services. Lastly, people who are satisfied with their purchase from your business are more likely to become repeat customers.

Customer acquisition costs

Customer acquisition costs (CAC) refer to the costs of bringing in new customers, which is an important factor in determining prices for your products or services. CAC typically includes the overall cost of marketing to a target audience, and the return or profit made through selling to your customers should outweigh your total cost. For instance, a business that sells car decals for $5 per decal should have a lower CAC than the item price. If the business has a $2 CAC, it stands to make $3 per decal, minus other business costs.

Related: 10 Steps to Starting a Business

Customer and client acquisition approaches

When evaluating your client acquisition model, you can integrate several approaches to reduce your overall CAC while bringing in more business and generating more revenue. A combination of digital and offline methods, for example, may prove more effective than using one or the other exclusively. The following approaches may prove effective for stimulating market interest and reaching new customers:

  • Social media marketing: These campaigns can offer a cost-effective way to reach your target market and gain customer interest. The advantages of using social media include the ease and speed of posting and quickly get the word out about specials, sales and new offerings.
  • Email campaigns: Email campaigns work effectively by providing resources and valuable information to leads who’ve expressed curiosity about your products or services. These campaigns let potential customers and clients decide when to visit your website and check out your offers.
  • Sales funnels: Funnel pages can help you gather insight into your target market and can be combined with social media or email marketing campaigns to reach customers. These pages typically use a six-step model that makes customers aware of your business, stokes interest, invites consideration, narrows down intent, encourages evaluation and finally drives purchases.
  • Acquisition loops: Systems that spur users to bring in new users are called acquisition or growth loops. These loops utilize things like viral and user-generated content to drive traffic to your sales funnel or directly to your web page. Other methods include using paid ad loops or sales loops to encourage upsells related to the original purchase.
  • Referrals: Word-of-mouth advertising based on existing customer satisfaction offers a tried-and-true approach to customer and client acquisition. Other effective approaches that fall under this umbrella include offering discounts, rewards or bonuses for customer referrals.
  • Pay-per-click advertising: This approach works to generate online traffic and lead customers to your online store, and it also provides contact details, so leads can interact with your business. You only pay when customers click on your ad, and if no one clicks on it, this approach doesn’t cost you anything extra.
  • Offline advertising: Some people don’t seek out businesses online, preferring instead to find them the old-fashioned way. You can target these potential customers using legacy methods of advertising. These can include handing out business cards, purchasing billboard space and showcasing your brand with logo-embellished T-shirts and pens. Other offline methods include print ads, television and radio advertising, and telemarketing.

No matter if your business is just starting out or has been established for years, customer and client acquisition is an ongoing concern. And while times and methods change, customer retention after the acquisition process involves providing high-quality goods or services to your base. This should drive your customer acquisition efforts and inform your methods for bringing in new business and ensuring existing clients keep coming back.

Learn more: How to Grow Your Business

Customer acquisition FAQs

Read these answers to frequently asked questions to learn more about customer acquisition:

How do you calculate customer acquisition cost ?

You can calculate customer acquisition cost (CAC) using a fairly simple formula. First, choose a time frame you want to measure, then divide the marketing costs by the number of customers acquired during that period. The resulting number represents the costs your business incurred to bring in each customer.

For example, if a business determines its CAC at $1,500 for a quarterly period, and it acquired 425 new customers during the quarter, its total CAC is calculated as ($1,500) ÷ (425 customers) = approximately $3.53 per customer. If the company charges $20 per item or service rendered, it should earn about $16.47 per customer purchase, before any deductions for other business costs.

How can I reduce customer acquisition costs?

To reduce CAC, evaluate the current costs of your approaches to bringing in new customers. Next, determine if these costs are more than what each customer generates in profits using the above formula for calculating your CAC. If your CAC is nearly the same or more than what your business makes per customer, break down the cost of each of your customer acquisition strategies. This can help you decide on which tactics to eliminate so you can implement new strategies that cost less.

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