Customer Acquisition is, perhaps unsurprisingly, just as it sounds… the process of acquiring new customers. Despite the simplicity of the definition, the execution is another story. With increasingly competitive markets and new technologies being developed every year, the options available for the modern business to reach new customers are seemingly endless.
So where on earth do you start, and what exactly goes into developing the right customer acquisition strategy for your business?
Unfortunately, there is no one size fits all approach and finding the right mix that works for your business is like experimenting with a cake recipe until you find the perfect mix of ingredients that just work. There are however some key principles that will guide you in the right direction.
So indulge your sugar cravings, chuck on your apron and jump in the kitchen with us to start whipping up your own killer Customer Acquisition Cake.
If the cake were to have a base, it would be having a solid understanding your audience. If you are to have any hope in getting new customers, you best know as much about them as possible. If the extent of your audience knowledge is “Women 25-40 years old” you have some work to do.
In all marketing, your goal is essentially to influence someone (your prospective customer) to take action (buy a product, click an ad, sign up to an email list etc).
The better you understand your prospect, the easier it will be to sell to them.
For a more detailed analysis into Understanding Your Target Audience, check out our post here.
As a starting point, you want to be able to answer these questions.
Who are they? Age, gender, income, location, marital status
What are their biggest problems and frustrations?
What do they want? What do they not want?
What are their interests?
What technologies or media types do they use?
How to do they use them?
Who influences their decisions?
Why would they buy your product or service? What problem do you solve for them?
Do they currently use your competitors? If so, why?
How are your competitors currently communicating to them (and where)?
As an exercise, you can begin by making assumptions, but it’s important to test those assumptions with research.
Whilst there are many ways to conduct this research, here are a few quick tips that will help you to clarify your understanding of your audience.
– Read reviews of similar products on Amazon or other review sites. Take note of the language they use, what they liked, what they didn’t like etc
– Read testimonials on competitors websites selling similar products
– Talk to people! Have a casual conversation with existing or prospective customers to gain a deeper understanding
– Create a survey and have your customers answer it. Customers will tell you a lot if you ask them. Consider adding an incentive (e.g. discount offer) to get more responses
Now you have an idea of who your customers are and what they want, you are better positioned to start developing your acquisition strategy.
Taking the time to create a plan and a strategy will ensure you run more effective campaigns and achieve better ROI from your customer acquisition efforts.
You can begin by asking yourself these questions:
– What are your goals for the campaign
Are you looking to sell a product up front, or perhaps it would be better off getting a new email lead and then following up with an email auto responder sequence? Or maybe you are a service business who would be best suited pushing for an inbound phone call? Whatever the objective is, it’s important to be clear about it. Keep your customer research in mind and ensure your objective is in line with that. For example, if you discovered that your audience prefer to talk to a sales person before making a big purchase, then aiming to sell your product directly online may not be the best strategy.
– What is your budget?
How much money can you invest in this campaign? This will heavily determine the approach you take. If you are selling a high value item or service, you may be able to invest more in advertising, knowing that you can recoup those costs when you acquire a new customer. You must be willing to spend money to make money, but your goal should always be to optimise this spend so that in time your customer acquisition efforts end with more money coming in than going out.
– Where is the yes place to reach your audience?
Taking the insights you uncovered your customer research and factoring in the amount of money you have to spend, you will be able to develop a channel mix for your acquisition strategy. To avoid overwhelm, unless you have a big team and lots of resources, focus on a handful of channels first and look to optimise them.
The best customer acquisition strategies have a balanced mix of channels each bringing in customers. It’s important not to become totally dependent on one source for new customers as if something changes with this changes, you are vulnerable. As you continue in your efforts, you will find that some of these channels will perform better than others. It’s critical that you continue to test each channel and optimise your strategy accordingly. A “set it and forget it” attitude will surely result in dollars slipping through your fingers.
So that you can test effectively, it’s important that you have the right metrics and measurement tools in place.
As the axiom goes, “what get’s measured gets delivered”. This means that whatever your channel strategy is, you must be able to understand how well each channel is converting. Relying on intuition alone is a very dangerous proposition. Setting up the right metrics will equip you to make smarter decisions.
Above all, you will want to know your Customer Acquisition Cost (CAC)- that is, how much it costs for you to acquire a new customer. The lower the cost the more effective the channel.
For instance, you may pay $1,000 a month in Google Ads. From 250 clicks per month that your ads receive, you receive two new customers who each buy a $250 product. This would mean that from $1,000 spent, you receive only $500 in revenue. The CAC of this channel is far too high to be sustainable and something has to change.
However before you run off and cancel the channel completely, it’s important to identify why it is ineffective. It could be that it’s simply the wrong channel for your product, but it could also be in the execution. Sometimes small changes to headlines, copy or design can have significant results. This is why it is critical to have the right metrics in place. A careful analysis of these metrics can enable you to uncover insights and make smarter decisions.
Second to the CAC, the most important metric is your conversion rate.
Your conversion rate is simply, the amount of people who have completed your conversion goal (sale, sign up etc) divided by the total number of visitors to that page.
For example, if you had 100 people visit your page and made one sale, your conversion rate would be 1%.
In an ideal world, you will make the most of every bit of traffic. Your sales pages should be continually optimised so that any traffic you get, paid or otherwise, has the greatest chance of converting. Optimising this conversion rate can be a very cost effective way to improve the ROI of your customer acquisition strategy.
You can only achieve this by having the right metrics in place and a culture of testing and optimising. It can be a challenging process, but help is available.
If you’d like to know more about how to build a killer customer acquisition strategy, or just have a chat to a marketing expert, give us a call here at Upside.Digital on 02 9114 6715