Whether you talk about fashion, real estate, technology or machinery, businesses need to acquire new customers to scale. After all, it is only by attracting new customers that you can bring in more business and generate more revenue. Yet, it is one of the most significant challenges for business owners.
So, how do you build a customer acquisition strategy that drives your business toward success? Let's find out.
What is customer acquisition?
Customer acquisition refers to the process of attracting new customers and getting them to buy your products. There are many channels businesses can use to bring in new customers. You can publish glitzy advertisements, use social media, have your agents call individual leads and talk about the company and so on.
It sounds simple enough, but it's easier said than done.
A good customer acquisition strategy has three steps. First, you need to attract qualified leads. These are people that show an interest in your brand and the range of products and services offered. Next, a relationship needs to be built and nurtured with them until they are ready to make a purchase. And, when they are finally ready to buy, the purchase process must be as streamlined and smooth as possible.
Why is customer acquisition important?
Customer acquisition is as important for startups as it is for established corporations.
Firstly, customer acquisition is integral to increasing sales revenue. The more customers you can attract, the more your business will sell. More sales translate to more income and higher profits.
Not just profits, acquiring new customers also helps balance the sales lost to inactive existing customers.
It also increases brand awareness which in turn helps the company grow. When you have a growing customer base, you can attract more investors and influencers. This is critical to increasing market share and building brand value.
New customers will also push you to innovate and improve your current products or services. Along with sales, they provide suggestions and feedback on what your products need. This helps you take the company to the next level.
What is the purpose of customer acquisition strategy?
It doesn't take rocket science to understand the purpose of having a good customer acquisition strategy. Without being able to consistently attract new customers, you can't maintain a stable business. That said, the cost of acquiring new customers must be controlled.
Whether you choose to pay for online advertising, rely on organic growth through word of mouth or design an email campaign, there is a certain ‘cost-per-acquisition' that will be incurred. You need to decide how much you are willing to spend on this.
Businesses usually work out their ideal customer acquisition costs based on the value being brought in. A 1:3 Customer acquisition cost to customer lifetime value ratio is considered quite good.
To attract new customers while maintaining an optimum customer acquisition cost, you need to design a sound customer acquisition strategy.
What are the stages of customer acquisition?
Customer acquisition is not an instant process. You need to catch their attention, nurture a relationship and take them toward making a purchase. This journey can be visualized in the form of a customer acquisition funnel that captures all the stages of acquiring new customers.
The Customer Acquisition Funnel
A customer acquisition funnel is wide at the top and narrows towards the bottom. It has 6 stages:
At this stage, customers are educated about how the brand sets itself apart from the competition. Brand communication at this stage is directed towards meeting customer emotions and interests that can be inferred by studying customer engagement and demographics.
This is akin to a familiarization stage. Here the prospect visits the company website and registers for a free trial or downloads content from the website. The idea is to make the customer familiar with the company and build trust in the brand.
As prospects move further down the customer acquisition funnel, they watch demonstrations and consult with sales agents to find products relevant to them. The customer may add products to their shopping cart and come closer to becoming a paying customer.
Customers with products in their shopping cart must be engaged to push them toward closing the deal. At this stage, the customer is usually weighing the pros and cons of making a purchase and comparing your product to the competition.
Finally, prospects reach the bottom of the funnel by completing a transaction. This makes them a customer of the brand. From here on, efforts need to be made to retain the customer's loyalty and create opportunities for cross-selling and upselling.
Customer acquisition channels can be broadly classified as offline and online channels.
Some of the most popular offline channels for customer acquisition are:
- Phone calls
Calling prospects who have shown an interest in your products and services is a time-tested channel for customer acquisition. When you set up a contact center with VoIP phone systems such as the one provided by Ringover, costs are kept low and you can reach out to an audience across the globe.
- Print advertisements
This includes advertisements on print mediums such as newspapers, flyers, magazines, etc. Print ads are a great way to make your brand name known to a wide audience but do not give you any control over the type of people your ad is shown to.
- Television and radio
Television and radio advertisements are more expensive compared to print ads but often have a stronger impact.
- Events and tradeshows
Promoting a brand at events and tradeshows is beneficial for B2B companies as well as those seeking to increase their local presence. You can cater to a more targeted audience, but the cost of acquisition can be quite high.
The common online channels used to acquire new customers are:
- Company website
Having a website is a powerful tool for customer acquisition. This is a platform that can be used to build awareness about the company and its product range as well as help prospects make purchases. You can also include a blog section on the website to publish content and attract more visitors.
Emails are a popular customer acquisition channel across industries. This helps engage with prospects and nurture relationships. It also keeps the brand name fresh in the customer's mind until they are ready to make a purchase.
- Social media
Social media platforms are effective at various stages of the customer acquisition funnel. Depending on your audience, you can use Facebook, Twitter, LinkedIn, etc. Advertisement posts can help build awareness while you can also send reminder posts to encourage prospects to buy products they have in their shopping cart.
- Pay Per Click (PPC) advertising
PPC campaigns are a great way to reach out to a targeted audience with an interest in your products and services. This is a great way to build awareness and get prospects to interact with the brand.
What are the best customer acquisition strategies?
The first step to setting up a customer acquisition strategy is to define your target audience. You need to know the characteristics of the customers you wish to acquire. Only when you know what your customers are looking for will you be able to design strategies that cater to their needs.
Once you have pictured your ideal customer, you can choose a channel and work on designing a customer acquisition strategy. Here are a few ideas that can help attract new customers and bring them through the customer acquisition funnel.
Gated content and giveaways
Designing content giveaway campaigns is a good way to attract new prospects and get them to share their contact details with you. The content can take the form of e-books, guides, research papers, etc. that add value to the prospect's life. Of course, this must all be original content.
Alternatively, you can give away branded swag items, gift cards, event tickets, etc. Giveaways can be promoted on landing pages, social media websites, events, etc. the key idea here is to build awareness about the brand and the product offerings as well as get their contact details so you can add them to calling and mailing lists.
Coupons and special offers
Seasonal discounts and special offers can make your brand more visible to prospects in the awareness stage. Similarly, when you are addressing the prospect's intent and at the evaluation stage of a customer acquisition funnel, coupons and special offers can act as the push required to get them to complete a purchase.
Calling a prospect to offer a discount can be quite an effective customer acquisition strategy. Alternatively, you could offer free shipping. Free trials are a great way to market services and software.
Search Engine Optimization (SEO) is one of the best and most cost-effective ways to make your website more visible in search engine results. This works for small businesses with limited marketing budgets as well as large businesses.
There's a lot that goes into an SEO campaign. It includes creating useful content with relevant keywords in the right concentration as well as optimizing web pages to keep visitors engaged for longer.
Adding images and video content makes your website look more attractive.
Affiliate marketing is an innovative way to acquire new customers. It involves partnering with existing customers or third parties who are offered rewards or a commission when people that they refer to your brand make a purchase.
Social media influencers who promote products and give their followers access to special deals by using a referral code are a form of affiliate marketing. This type of program allows you to passively reach out to a very wide audience who might otherwise not know about your brand or products.
Irrespective of the funnel stage a prospect may be at, nothing beats calling a prospect and talking to them about a brand and its products. Of course, for this strategy to be effective, you must know the person, their interests, connection to the brand, etc. before starting a call. This is how warm calling differs from cold calling.
While cold calling has a success rate of about 2%, the success rate of warm calling can go up to 30%. You also need a cost-effective communication plan that allows your sales representatives to speak to leads without worrying about the clock ticking.
What is an example of acquisition strategy?
Examples of acquisition strategy include cold calling, email outreach, social media, partnerships, and much more. The best way to understand how to design and implement a customer acquisition strategy is to study what other brands have done in the past.
For example, if you want to set up a referral program, take a look at how Evernote has structured theirs. Any customer who can get a new customer to sign up for an individual plan earns a commission. Or, check the Prezi referral program where referrers get a chance to win up to $5,000.
A Final Word
Every company needs to continually work on acquiring new customers. Irrespective of the channel or strategy you choose, the secret to winning over new customers and retaining their loyalty lies in nurturing a relationship with them and giving them the best experience during every interaction. A little effort toward personalizing communication goes a long way in bringing new customers on board.