How to Calculate and Create an Effective Customer Acquisition Strategy
Customer acquisition is the typical process of identifying potential clients to purchase products in a manner that is both repeatable and measurable. In addition to attracting new clients, a formidable customer acquisition strategy improves profits and retains loyal clients. It is critical to understand that acquisition begins at first contact with a prospect and advances into the strategy for retention. Customer acquisition is an intricate term that covers several aspects, such as customer loyalty, conversion rate optimization and lead generation. Whether you’re a successful entrepreneur or a small startup, customer acquisition remains relevant in the growth of your business.
How to develop a formidable customer acquisition strategy
Developing a successful strategy requires extensive research and commitment. Below are some of the habits you may want to consider when creating a professional customer acquisition strategy:
1. Spotting the ideal prospects
Understanding your customer base is the most critical step toward acquiring new customers. To achieve this, you must invest your time and resources in analyzing the market requirements and competitors. Studying the product-market fit will enable you to develop marketing goals and spot ideal clients. Keeping track of your client profiles can also help you expand, analyze and understand your customer.
2. Identify your customer acquisition media
Spotting your ideal prospects and highlighting your goals and objectives is an excellent start toward creating an unshakable strategy, but it is not enough. Your research should reveal the best channels to use and the type of content that flourishes there. A customer acquisition channel is any media your potential customers can access your brand, whether through a paid ad, social media or organic search. Some of the most effective customer acquisition channels include YouTube, Instagram, Facebook, Referrals and paid social.
3. Have a unique acquisition plan for each channel
Getting on every channel may seem like a great way of reaching a broader customer base, but it may hurt your customer acquisition strategy. For instance, if you target youth, you may access a bigger audience on TikTok and Instagram. In such a scenario, investing your resources in channels such as Google Shopping ads and Facebook would be futile. When designing a marketing plan for each channel, concentrate on your competitors’ activities, the KPIs feedback, and the content your audience can access.
4. Interact with your customer base
It is challenging to identify the pain areas of your customers without their direct feedback; to acquire it, you need to request it. Social media posts, customer surveys, blog posts, and customer interviews are great ways to collect feedback and make the necessary adjustments. Develop a communication strategy to ensure you are constantly in touch with your customers.
Calculating customer acquisition cost (CAC)
Customer acquisition cost refers to the accumulative cost of acquiring new clients, including product cost, research sales and marketing. It is a vital metric as it enables a company to gauge the worth of a customer. To attain an intimidating front for your competitors involves ensuring that your customer acquisition tactics and channels are effective. Every entrepreneur aims to minimize customer acquisition costs while maximizing the customer base. Before calculating CAC, you need to outline the specific period you are evaluating, whether it is a year, quarter or month. The second step involves adding the total sales and marketing expenses and dividing the total by the number of clients acquired during that period. The resulting value is the company’s estimated CAC. Entrepreneurs can compare this value to their business metrics and uncover worthwhile insights about customer service campaigns, sales and marketing. For most investment sectors, the acceptable LTV: CAC ratio is 3:1, meaning that a client should be worth thrice more than the CAC.
Customer acquisition is the backbone of any business, and you can’t afford to stop advertising your products, no matter the cost. However, research depicts that a company’s growth does not lie with the sales or marketing team but with the company’s service team and customer base. Most companies that put their clients in the spotlight have higher chances of succeeding. Additionally, a strong customer acquisition strategy guarantees lower customer acquisition costs and increases the customer lifetime value. Instead of perceiving customer acquisition as a one-way road, start visualizing it as a flywheel.
