How often do potential customers need to see or hear about your products before purchasing? World-renowned marketing guru, Dr Jeffrey Lant, came up with the ‘Rule of Seven’ to explain customer acquisition. According to Lant, it takes shoppers an average of seven interactions with your brand before deciding to buy.
Before, you could rely on getting enough exposure by running ad campaigns on multiple websites so potential customers would see you in numerous places. Today, running an online store takes more than having a Shopify website and ads on social media to guarantee sales.
Brands are constantly looking for ways to acquire new customers. We live in an ever-evolving digital landscape where grabbing potential customers’ attention has become more sophisticated than before. But with the rising cost of customer acquisition through paid methods and the competitive nature of businesses today, it’s essential to develop an effective strategy that will lead to profitability.
Customer acquisition strategies are constantly changing and evolving, so staying up-to-date with the latest trends and technologies is essential. This article will discuss the best practices and systems to effectively acquire more customers in 2023. We’ll also provide insights into potential pitfalls that may prevent your business from acquiring new customers in the future.
What is customer acquisition?
Customer acquisition is a way of gaining new customers by persuading potential shoppers to buy your products. The process often involves marketing tactics and strategies to increase brand awareness and drive customer engagement, from streaming ads with coupons or QR codes to offering free samples to passersby.
Whether you’re a small business trying to gain its first hundred customers or an experienced company looking for its millionth customer. Customer acquisition is always a significant part of your day-to-day. Businesses continuously work to identify new repeatable marketing methods to attract potential customers with tempting offers and promotions. As a result, companies increase their customer base, increasing sales and profits.
But how much should you spend on customer acquisition to increase profits?
How to calculate customer acquisition cost (CAC)
Attracting new customers typically involves a cost that varies depending on the tactics used to acquire them.
To calculate customer acquisition cost (CAC), you need to divide the total amount spent on sales and marketing efforts by the number of customers obtained. For example, suppose your company spends £10,000 on sales and marketing initiatives in a given month. That month, the result is 100 new customers; your CAC would be £100 per customer.
Marketing spend (£10,000) ÷ new customers (100) = CAC (£100 per customer)
Although, in reality, CAC can be tricky to predict as it can vary for many reasons —
from the product sold and the target audience to the competitive landscape or your team’s ability to convert leads into paying customers.
According to Roxanne Voidonicolas at Shopify, “As a rule of thumb, you shouldn’t spend more than 5% to 8% of your total budget on marketing.”
What goes into creating a successful customer acquisition strategy?
Creating a customer acquisition strategy is essential for any business looking to grow and expand. It helps you identify your ideal customers, define your goals, choose the most effective channels, develop a unique strategy for each channel, and communicate with your customers.
The first step in creating an effective customer acquisition strategy is identifying your ideal customers. This step involves researching who they are, their needs and wants, and how they interact with your product or service. Once you have identified these critical characteristics of your target audience, you can define your goals. These should be specific and measurable objectives that will help you track the success of your customer acquisition efforts.
Next, it’s time to choose the correct channels to reach potential customers. You might include social media platforms such as Facebook or Instagram, email marketing campaigns, search engine optimisation (SEO), or traditional advertising methods like radio or television commercials. For each channel you use, it’s crucial to develop a unique strategy tailored specifically for that platform so that you can maximise its effectiveness in reaching new customers. Finally, remember to communicate with existing customers as well; this will help build loyalty and encourage them to recommend your products to their friends.
Learn about your ideal customers.
Identifying your ideal customers is essential for any business. It helps you understand your current shoppers and target customers so you can tailor your marketing efforts accordingly. The best way to better understand your customer base is to study your competitors and continuously collect insights into your target customers. For example, how they think, act and buy, to know you’re always making the right decisions for business growth. This data will help you determine what product-market fit works best for you so that you can identify ideal customers and set marketing goals accordingly.
When trying to figure out your audience, ask yourself questions like: What do customers accomplish with my product or service? What are their struggles? Answering these questions will help you narrow down the characteristics of your ideal customer and give you an idea of how to reach them through targeted campaigns. Once you’ve identified your ideal customer, creating content that resonates with them and builds relationships over time is much easier.
Define your goals
Clear goals and objectives are essential for any business, especially regarding customer acquisition. When setting goals, you must consider the ideal customers you are trying to attract and what metrics will be used to measure success. Standard customer acquisition metrics include CAC (customer acquisition cost), new customer growth, LTV (lifetime value), churn rate (customers who stop buying), and LTV:CAC (lifetime value to customer acquisition cost). In addition, these metrics can help identify factors such as where customers hear about products, where they buy them, and other determining factors.
Analytics plays a vital role in understanding customer acquisition results. Without analytics, it would be like driving with your eyes closed; you wouldn’t know where you were going or how you got there. Measuring these metrics can help create a strategy that aligns with overall business goals while accounting for customer churn and growth. By understanding the data behind customer acquisition efforts, businesses can make informed decisions that will lead to better long-term results.
Determine which channels you will use to attract customers.
When it comes to customer acquisition, it is essential to identify the ideal customers and set goals for acquiring them. Various online and offline channels can reach potential customers at different stages of buying or decision-making. Each channel requires different types of content to be effective.
For example, suppose your products are only available from some retailers. In that case, most target customers will not have heard of you and are unlikely to search for your brand by name. So Google Shopping ads and keyword-rich content and product pages would be the way to reach potential customers who are actively searching for similar items by your competitors. In contrast, a potential customer thinking about making a purchase is likely to follow your brand on social media and may be receptive to user-generated content shared in your feed.
Prioritising what channels to use is key to creating a profitable marketing strategy. It’s essential to understand which channels will be most effective for reaching your target audience and focus on those channels first. Additionally, it is crucial to track the performance of each channel to determine which ones are providing the best return on investment. Focusing on suitable media channels and monitoring their performance can create an effective customer acquisition strategy to save the business money.
Create a tailored approach for each channel.
Crafting individualised strategies for each platform is essential for customer acquisition. Gauge what type of content your audience responds best to, see what competitors are doing, and use your KPIs as a guide when designing your strategy.
Instead of going all in on one channel, we recommend that brand owners take an omnichannel approach to creating promotional campaigns for customer acquisition, using multiple digital channels for better reach and minimal risk. For many, this would include using SEO, Google Shopping ads, email campaigns, social media marketing, content creation and promotion, and influencer marketing.
Research the most effective tactics for each medium and customise them according to your goals to acquire customers and the best types of content.
In conclusion, customer acquisition in 2023 will require a well-thought-out strategy that considers the customer’s needs and goals and the best channels to reach them. By researching your ideal customers, setting goals, and creating unique strategies for each channel, you can ensure that your customer acquisition efforts are successful.