Customer Acquisition Strategy: How to Create a Customer Acquisition Strategy
Whether you’re striving to attract your first or your ten-thousandth customer, a smart and well-executed acquisition strategy is essential to your business’ success.
Customers are the lifeblood of any business, essential for both survival and growth. But in an increasingly competitive digital landscape – where consumers are inundated with up to 10,000 brand messages a day – how do you formulate a marketing strategy to keep attracting new customers?
For Eve Jones, founder of British sustainable clothing business Sisterhood, customer acquisition was a top priority, even before the business was launched.
“I started my Instagram account a year before the brand went live to start gaining followers as part of my first marketing strategy,” says Jones, whose business now operates in the US and Australia as well as her native UK. “I also planned to gift items to specific bloggers and influencers to grow brand awareness, and started using Facebook ads for Facebook and Instagram quite early on.”
“I started my Instagram account a year before the brand went live.”
Jones’ acquisition strategy has evolved since then and she now contracts an agency to manage it, but the fundamental principles remain the same.
But Jones’ savvy strategising is not the norm: too many businesses overlook the need for a properly thought-out customer acquisition strategy. So, we’ve compiled the ultimate guide to building a strategy that works for your business, and clarity around common terms used in this sector.
What is a customer acquisition strategy?
When was the last time you purchased something from a new brand? How did you first come across their product?
Was it during a mindless Instagram scroll? Did you walk by their store and have a positive memorable experience, or perhaps see an ad on TV or at the train station?
Chances are, your purchase was the direct result of a considered and clever customer acquisition strategy.
In simple terms, a customer acquisition strategy is the methods a business uses to reach and convert new customers, and ultimately increase profits.
An effective strategy is the combination of lead-generation tools and product offers that turns potential customers into paying customers. This strategy can include online or offline elements, from traditional advertising such as print, radio and TV to digital tactics like retail search engine optimisation (SEO), content marketing, affiliate marketing or social media campaigns.
Why do you need a customer acquisition strategy?
While we know that customer retention costs are lower than customer acquisition costs – to retain a customer, you must first acquire them. And in an increasingly competitive market, acquiring loyal customers doesn’t happen by chance – it requires a considered strategy.
“To sustain and grow your business, you need to have new customers,” confirms marketing expert and founder of With Small Business Claudia North. But there’s a big difference between selling to new customers, and actually acquiring them.
“To sustain and grow your business, you need to have new customers.”
“A lot of small businesses struggle with having the time to commit to actual strategies, so they instead implement tactics on a more ad hoc basis, such as running a Black Friday or Cyber Monday [sales] campaign. But that won’t achieve growth, especially in the digital environment,” North explains.
She warns that running one-off product campaigns without a formal or longer-term strategy in place won’t achieve the brand recognition and buy-in necessary to acquire a customer for the long haul.
“While you may get revenue, you’re actually buying sales rather than investing in long-term growth. You need to implement what I would call an ‘always-on’ marketing approach, which involves an ongoing strategy to help move customers down your marketing funnel.
“Not only does it drive consistent conversions, it provides you with insights into potential customer behaviour, which you can then evaluate and use to inform and refine your customer acquisition strategy and other marketing activity as you go.”
"You need an ‘always-on’ marketing approach."
It’s worth considering that without a defined strategy you’re more likely to sink valuable marketing dollars into short-term sales that don’t actually acquire new customers, and miss out on opportunities for long-term growth.
When should you create your customer acquisition strategy?
Whether you’re a start-up looking to gain your first 50 customers, or a thriving business celebrating 100,000 purchases, you should be implementing a customer acquisition strategy – as soon as possible.
Customer acquisition, however, is not a set-and-forget process. It’s important to continually evaluate and refine your plan. Plus, if you implemented a strategy when establishing your business but are now looking to acquire a new customer demographic, chances are you will need to implement a new one.
Brian Hong, owner of lead generation platform Infintech Designs, explains: “A business should re-evaluate their strategy [when] launching a product or service that is targeting a different customer segment. If set up and used correctly, the strategy will serve as a guideline on how you will meet the needs of your new customer, based on their buying behaviour and responses to your marketing and advertising.”
“A business should re-evaluate their strategy when launching a new product or service."
It’s also important to ensure that your customer acquisition strategy aligns with your customer retention strategy, too, in order to retain and nurture new customers.
How to create your customer acquisition strategy
1. Identify the customers you’re trying to acquire
Of course, a consumer acquisition strategy must be customer-centric. So, before you decide which tools and platforms will reach your potential customers, you need to know who those customers are, and what drives their purchasing decisions.
This means identifying your target market and conducting comprehensive research to identify which customer acquisition tools will be most effective. This may involve carrying out a competitor analysis to determine where your competitors are acquiring customers, studying buying behaviour and holding focus groups.
2. Define your growth targets
Setting targets upfront will allow you to measure which tactics are working, and to refine those that aren’t. “I see a lot of business owners struggle with setting growth targets,” says North. “But putting a quantifiable figure on your acquisition strategy is imperative for both the direction it takes – and, of course, the evaluation.”
Goals will look different for every business, depending on the product, service, industry, and the age and phase of the business.
North continues: “Ask yourself: are you trying to boost revenue by a certain percentage? Or are you trying to acquire a specific number of customers? How much do you want your acquired customers to spend on each sale, and how many times do you want them to come back to purchase from your business?”
3. Choose your channels
Your customer acquisition channels (or platforms) must align with your target customer and where they spend their time.
Let’s say that your target customer is women aged 25 to 35, who spend a great deal of time on Instagram and purchase their clothing on that platform: clearly Instagram will be a key channel for your customer acquisition strategy, and you may want to consider high-quality paid ads.
Conversely, if you’re targeting baby boomers with a health insurance product, you may choose to advertise on television after the evening news, as this is where you are more likely to reach them.
Using a combination of channels to optimize your strategy can be highly effective, but North warns against trying to do everything at once.
“Jumping between different tactics won't work, because you won’t acquire the same data."
“The marketing environment these days is very complex, with so many platforms and tech advancements. Business owners are getting overwhelmed with blogs and articles every day that have differing opinions on what they should do. So, they make the mistake of thinking they need to be doing everything at once and jump from tactic to tactic.
“Jumping between different tactics is going to see a low return or no return on investment, because you won’t acquire the same data. We’re in the age of data now, where the whole digital environment is about information and insights – and learning from that in order to gain more sustainable growth.”
4. Establish two-way communication with your customers
If a customer is undecided about a purchase, then it’s important that your brand is available to address any questions or concerns.
Email contact forms, customer surveys, pop-up rating questionnaires, social media posts and stories, and even blog posts with an open comments section are great, cost-effective ways to communicate with your customer base. You can use these platforms to ask for feedback, answer questions they’re likely to have, promote a sale or deal, or nurture your potential customer by keeping your brand top of mind.
5. Evaluate and improve your strategy
Check the results of your customer acquisition strategy regularly. Which tactics are working and how can you refine and optimise your approach?
The more that you finetune your strategy, the fewer resources you will waste. And always pay attention to your KPIs, not just so-called vanity metrics like impressions or reach.
Metrics to help measure success
Customer acquisition cost
The first metric to analyse is customer acquisition cost (CAC). The CAC factors in the total cost of obtaining a new customer – which might cover research, marketing, advertising, promotional products and postage – and divides that total cost by the number of new customers acquired.
The average CAC varies according to industry and channel.
Lifetime Value (LTV)
The other key customer acquisition metric? Lifetime Value (LTV), which is the projected revenue one customer will generate for a business during their entire relationship with the brand. The LTV formula factors in the average purchase value and purchase frequency per customer, along with the customer value and average consumer lifespan with your company.
Most industries aim for the LTV:CAC ratio to be 3:1, meaning the value of the customer is three times the cost of acquiring them. If the ratio is dipping toward 1:1, you’re spending too much money and need to reassess your strategy.
Proven customer acquisition strategies that work
1. An optimised website
Having a great website might sound obvious. Your landing page is the digital shopfront of your business and the site must be fast-loading and easy to navigate.
You should also consider optimising your website for search (known as search engine optimisation, or retail SEO). Writing compelling copy and building SEO-friendly content won’t break the bank, and there are several budget-friendly platforms to help you build a conversion-driven website.
2. Prioritise the customer experience
Whether you’re a bricks-and-mortar retailer, an e-commerce store or a service-based business, providing a positive customer experience is integral to acquiring and retaining loyal buyers.
If you have physical premises, tailor your store layout to your ideal customer and make it easy for them to purchase by having the products clearly displayed and a user-friendly counter. If you’re an online retailer or service-based business, optimise the user experience with succinct, informative and engaging content and clear calls to action (CTAs).
3. Leverage social media
With a staggering 1.21 billion active users on Instagram, and 1 billion active users on TikTok, social media platforms provide an unrivaled opportunity to reach mass audiences. If you’re in the building phase of your business and don’t have a huge budget, simply sharing branded content and organically engaging with users to build awareness is a great way to start.
As your revenue increases and you build budget for advertising, you can run targeted ads through your social platform of choice using their native ad platforms. As you continue to grow your brand and budget, you can make your campaigns more and more targeted to nurture your potential customers from brand awareness right through to point of purchase.
4. Optimise your email marketing
It may have been around for a while, but email marketing remains a budget-friendly way to reach customers directly (without going through a third-party platform like social media).
Consider using email marketing for lead nurturing by sending a sequence of strategically connected emails to gradually encourage your customer to take action. Lead-nurturing emails (or lead-gen emails) can be used to promote or sell your product or services – or they can help promote content marketing initiatives such as webinars, or blog posts. It’s a highly effective customer acquisition strategy as it can move your potential customers down the marketing funnel for minimal spend.
All references to any registered trademarks are the property of their respective owners. Afterpay does not endorse or recommend any one particular supplier and the information provided is for educational purposes only.
Categories