Customer Acquisition: A Guide for Business Operators

Customer acquisition is the process organizations use to generate new and repeat business. The way you approach customer acquisition can impact the revenue your business is able to generate. You can use the information provided in this guide to help you develop a deeper understanding of how customer acquisition works to grow a 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 customer acquisition is to continuously generate new customers through marketing and advertising or providing unique selling points and buying incentives. There are a variety of approaches to take when implementing customer acquisition strategies such as social media campaigns, publishing authoritative content to elicit customer interest and offering discounts for people who refer new customers to make a purchase.


You can track and measure several of these approaches to customer acquisition more easily than others (such as social media insights versus tracking word-of-mouth referrals). You can maintain and evaluate many customer acquisition processes using key performance indicators like conversion rates from funnel pages.


Examples of customer acquisition

Customer acquisition strategies differ depending on what it is you’re selling. For instance, when providing a service like financial consultation, customer acquisition might mean implementing marketing strategies that place these service offerings in front of target markets. The following examples can also illustrate how a business might approach customer acquisition:


  • Acquiring service 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 have expressed interest in learning about a company’s product through filling out a form within a sales funnel
  • Engaging a target market through social media, personal chat or personalized email communication to build community and find ways to fulfill market needs that encourage customers to remain loyal to a business


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, and it can also work to encourage other customers to come in and try your products or services. People who find satisfaction through purchasing from your business are more likely to become repeat customers.


Customer acquisition costs

Customer acquisition costs (CAC for short) refer to the costs of bringing in new customers. CAC can include the overall cost of marketing to a target audience, and the return or profit made through selling to your customers should outweigh your total CAC. For instance, a business that sells car decals for $5 per decal should have a lower CAC than the item price (such as $2 in costs per customer acquired) in order to make a profit.

Related: 10 Steps to Starting a Business


Approaches to take

When evaluating your customer acquisition model, integrate several approaches to lowering customer acquisition costs while bringing in more business and generating more revenue. The following approaches can prove effective for eliciting market interest and reaching new customers:


  • Social media marketing: Using social media campaigns is a cost-effective way to reach your target market and gain customer interest.
  • Email campaigns: Email campaigns work effectively by providing resources and valuable information to leads who have expressed curiosity in your offers.
  • Sales funnels: Funnel pages are an effective approach to gathering insight into your target market. Combine this approach with social media or email marketing to reach customers.
  • Referrals: Word of mouth or offering discounts, rewards or bonuses for customer referrals is another effective approach for bringing in new customers and retaining current ones.
  • Pay-per-click advertising: This approach works well to generate online traffic and lead customers to your online store or contact details so they interact with your business. You only pay the costs when customers click on your ad, which means if no one clicks on it, this approach won’t cost you anything extra.

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 ?

Calculate customer acquisition cost (CAC) using a fairly simple formula. First, choose a period you want to measure, then divide the marketing costs by the number of customers acquired during that period. The result is a number that represents the costs your business spends 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 business sells its products or services for $20 per item or service rendered, this means high profitability for the business, since it is earning around $16.47 per customer purchase.


How can I reduce customer acquisition costs?

To reduce CAC, evaluate the current costs of your approaches to bringing in new customers and determine if these costs are more than what each customer generates in profits. You can use the formula for calculating your CAC. If your CAC is nearly the same or more than what your business makes per customer, you can then break down each strategy you use for customer acquisition to see which of your approaches are costing you the most. Then, you can reevaluate these strategies to determine if you need to eliminate certain tactics or implement new strategies that cost less.


What is the process of customer acquisition?

The process of customer acquisition involves a variety of tactics and marketing strategies that work to gain customer interest and bring these new customers to your business. Doing this involves performing some market research to identify specific needs or problems your products or services can solve. Then, using this information, marketing teams develop low-cost strategies for getting your products or services in front of the right audience.


As an example, one approach to the customer acquisition process is to combine a social media campaign with a click funnel to gather potential customers’ email addresses so you can send correspondence and educate your market about your offerings. Then analyze the budget for spending on social media ads, designing and integrating a funnel page and track the performance of each strategy to monitor its effectiveness.


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