- Customer acquisition costs continue to increase as more brands compete for digital ad space
- Strategically identify key acquisition channels where you can provide clear value to your audience.
- Find ways to improve acquisition costs. SEO reduces customer acquisition costs by as much as 75%.
Customer acquisition is getting harder. A lot harder.
In the past five years, customer acquisition costs have jumped by more than 50%. Why? There are a number of contributing factors, including:
- Decreased consumer trust in brands
- Increased competition
- Rising advertising costs
- Lower organic reach on social media
- And many more…
Customer acquisition is the lifeblood of all brands, whether your business model is brick and mortar, ecommerce, or SaaS. Faced with these rising customer acquisition costs, it’s critical that you develop and continually optimize a clear plan.
To that end, this step-by-step guide reveals how to develop an effective customer acquisition strategy, identify the right channels, and drive better outcomes.
DEVELOP AN EFFECTIVE CUSTOMER ACQUISITION PLAN
You need a clear customer acquisition plan to acquire new customers at a reasonable cost. Otherwise, you’ll likely stumble from one tactic to another, and you won’t achieve a reliable, profitable, and scalable process.
The first step is to define your ideal customer. Who is your perfect customer and what makes them such a good fit?
Create buyer personas
Create buyer personas to understand your target audience in as much detail as possible. Conduct interviews, polls, and surveys. Study search data. Monitor their conversations on social media. See which emails and Facebook ads resonate the most. What problems are they trying to solve and what issues do they care about? Do they turn to Google or Amazon for answers? What is the “job to be done” that your product fulfills?
Here are 9 solid examples of buyer personas to get you started.
Once you’ve defined your ideal customer, determine:
- The acquisition goals you’re seeking to achieve
- How you will measure success
- The channels you will use to connect and engage with them
- The tests you will conduct to optimize your acquisition programs
Finally, take time to analyze your competition. What strategies are they using to acquire customers? Find their weaknesses and then perform a bit of marketing jiu-jitsu in capitalizing on their weaknesses and galvanizing your comparative strengths. Find specific ways to clarify your differentiation and set yourself apart from others in your space.
IDENTIFY THE RIGHT ACQUISITION CHANNELS
A key part of your acquisition strategy is finding the right customer acquisition channels. Think about the places your existing customers spend most of their time and how you can provide value in those particular channels.
For example, the social media tools developer Buffer doubled down on guest blogging. As a result, the company acquired more than 100,000 customers in the company’s first nine months.
And once you’ve gained traction, continue to look at how to increase your acquisitions. Terakeet helped an online bank increase monthly organic enrollments by 553% within 19 months through SEO.
Here are some of the primary acquisition channels you should consider.
SEO produces an average ROI of 5.3X compared to paid
SEO reduces CAC by as much as 75% compared to paid
Enterprise SEO strategy
As seen in the online bank case study above, enterprise search engine optimization is an incredibly powerful channel for new customer acquisition. Think about it. When potential customers are searching for answers at the top of the funnel, where do they go first?
If you can consistently show up on Google page one for valuable keywords, you can connect with prospects who are actively looking for what you have to offer. When you know what potential customers are looking for and are able to provide them with truly valuable content that aligns with their intent, you are well-positioned to win them over as new customers.
What’s more, SEO is both cost-effective and scalable. Plus, the ROI of SEO compounds over time, making it especially attractive to growth-oriented companies. In its economic impact report, Google itself estimates that SEO produces an average ROI of 5.3X.
Find out how to develop an unstoppable SEO strategy.
Your blog can be an extremely valuable customer acquisition tool, and companies like Levi’s, Schwab, HubSpot, King Arthur Baking, and Refinery29 have all used blogging to fuel growth.
There are several key benefits of an SEO blog strategy:
- When optimized for search, blog posts can be a huge driver of website traffic.
- Blogging allows you to thoroughly explore specific topics, which in turn provides large amounts of value to your audience.
- It positions you as a thought leader in your industry.
- You can demonstrate your expertise to potential customers.
- You can let your brand personality shine through.
- Plus, blogging delivers a substantial ROI.
Your digital content marketing strategy should involve consistently creating highly valuable, relevant content. But, you also need a plan to distribute that content to a wider audience. It can include everything from blog posts to videos, white papers, market research reports, lookbooks, infographics, data visualizations, webinars, SlideShares, social media posts, and podcasts.
Through content marketing, you can educate your potential customers about both the problems they deal with and how you can help them solve those problems. Or, in an area like fashion, you can reveal the trends and upcoming direction of the market so that they are “in the know”. Ultimately, this leads to deeper relationships with customers, a higher conversion rate, greater customer retention, and a stronger brand.
Video marketing is gaining traction as an effective channel for running customer acquisition campaigns. Its rise in popularity is due to several key factors:
- Videos tend to get more engagement on social media than other formats — especially on Linkedin.
- Video production has become significantly easier and cheaper in recent years thanks to powerful smartphone apps.
- Video marketing is uniquely experiential, helping brands to connect on a more emotional level with audiences.
And it’s difficult to argue with the results of video marketing. According to a 2020 Wyzowl study:
83% of video marketers say video has helped them generate leads
80% of video marketers say video has directly helped increase sales
89% of video marketers reported that video gives them a positive ROI
With billions of cumulative daily users, social media platforms allow you to build an engaged audience who are genuinely interested in what you have to offer. And if you’re able to engineer viral posts, you can quickly gain a great deal of exposure for your business.
Knowing the power of social media as a customer acquisition tool, Shopify focused on putting out a daily video on Facebook for three months. One of their videos was about how to start a t-shirt shop in only 10 minutes. It racked up over 8 million views, over 30,000 shares, and generated a large number of customer sign ups.
Despite being 25+ years old, email marketing is still going strong. Why? Because it’s still incredibly profitable, generating a return of $38 for every $1 spent. Brands that describe their email marketing programs as successful achieve even better returns, reporting an average ROI of 42:1.
Email uniquely allows you to develop strong relationships with prospects, nurturing them until they’re ready to buy from you. What’s more, your email list is your own personal source of traffic. Every time you create a new piece of content or have anything new and exciting to say, you can send it to your list, ensuring that it gets lots of eyeballs. Not only is email an effective customer acquisition marketing tool, it’s also a useful way to minimize churn once they become your customer.
Nurture cool leads through email until they’re ready to become customers.
Is this your first time building a list? Discover 14 ways to get more email subscribers here.
Paid media, such as social, search, and display ads, allows you to get your brand in front of a specific group of people at scale. The main advantage of paid media is its speed.
Another benefit of paid media is that you can increase or decrease the volume of ads as circumstances dictate. If you want to shift your focus to acquiring more organic traffic, you can easily reduce your paid ad spend.
Paid media allows you to test out new messaging or offers, and gain initial traction for a new product or service. The downside of paid media is that customer acquisition costs tend to be high. In addition, once you stop priming the pump with dollars, all related acquisitions immediately go to zero.
Read our PPC vs SEO comparison to find out which is better.
Account Based Marketing (ABM)
With Account Based Marketing (ABM), you focus on marketing to specific accounts or companies that you deem as the highest priority on your wishlist. With inbound marketing, you try to get new leads to come to you. Yet, you have little control over which specific companies ultimately engage with or contact you. In comparison, with ABM, you create personalized marketing for very specific, targeted companies, and so you have full control as to who experiences a brand touchpoint with your brand.
ABM allows you to uniquely stand out in a crowded, saturated market. No other channel affords you the ability to customize per account as much as ABM. And though this customized approach requires a bit more time and effort, it often yields a higher ROI than more broad-brush customer acquisition efforts. In fact, according to an ITSMA study, 99% of marketers confirmed that they generate a greater ROI from their ABM programs than all other types of marketing programs.
Influencers are a powerful lever to increase brand awareness through word of mouth. If you build the right relationships, they can help you amplify user acquisition.
Set up customer referral programs with industry movers and shakers, and work with them to develop and improve marketing tactics. They’ll get a referral fee, and you’ll grow your customer base.
IMPROVE CUSTOMER ACQUISITION PERFORMANCE
Once you select your primary customer acquisition channels, you need to focus on improving the performance of each channel. The more you can optimize your marketing efforts, the lower your acquisition costs will be and the higher your ROI.
Here are a few ways to improve performance of the customer acquisition process.
At a minimum, every marketing campaign should have its own unique lead gen landing page. This allows you to customize the landing page for the specific message and offering and to accurately measure the results.
If you send leads to the homepage of your website, you miss out on the opportunity to align with their specific interests, customize the pitch, and have a greater impact.
For example, say you sell a product with features that appeal both to marketers and HR personnel. Creating separate pages for each audience allows you to uniquely highlight benefits and features that appeal to that particular group and resonate more deeply.
A/B testing is essential for improving overall customer acquisition performance. It allows you to find what resonates most with your audience and then double down on it. You should test the following elements:
- Headlines, body copy, imagery, calls-to-action (CTAs), and the layout on your website and landing pages
- Text, images, headlines, and CTAs on social media posts
- Email subject lines, messaging, and CTAs
- Blog post headlines and CTAs
- Blog post title tags and meta descriptions
- Video titles, length and formats
- And more
When you identify a winner, implement those changes and then move on to your next experiment. This allows you to make consistent, incremental improvements to your customer acquisition.
Behavioral analysis allows you to read the “digital body language” of your website visitors. Using behavioral analytics tools, see beyond page views to uncover how visitors are actually behaving on your pages. You can see where they’re clicking, how far they’re scrolling, where their attention is focused, why they encounter any friction, and where they abandon ship.
This data allows you to identify underperforming pages and then make key changes for a better customer experience. You can see if your messaging isn’t connecting with customers and where your funnel has holes in it. You can also add in behavior-specific CTAs that trigger only if a person takes specific actions.
HOW TO MEASURE CUSTOMER ACQUISITION
The only way to know if your customer acquisition efforts are succeeding is to carefully measure them.
Calculating customer acquisition cost (CAC)
CAC is the total sales and marketing costs for acquiring one new customer. It’s the amount spent in a given period of time divided by the number of customers acquired in that same period.
CAC = (Marketing Costs + Sales Costs) / # of Customers Acquired
When calculating the cost of customer acquisition, make sure you include all costs, not just direct ones. For example, if you plan on utilizing content marketing, you need to include the time required to create and distribute the content, including all strategy, copywriting and design costs. You’ll also need to include promotional costs, the cost of content management software, etc.
If your CAC isn’t higher than your customer lifetime value (CLV) (the amount of revenue a customer brings in over the lifetime of your relationship with them), you’ll endlessly be losing money. Your goal is to optimize your CLV/CAC ratio for maximum profit.
One way to increase your CLV/CAC ratio is to reduce overall acquisition costs. Assuming all things remain equal, reducing your CAC increases your profit margin and strengthens your bottom line.
Some ways to reduce CAC include:
- Improve your funnel — The more effective your marketing funnel, the lower your CAC. To do this, you need to know how much a lead costs and how many of those leads turn into paying customers. Once you have this data, you can begin to optimize each section of your funnel.
- Use lower cost channels — Organic channels, such as SEO, typically cost less and have a higher ROI than paid media. By focusing on lower cost channels, you can acquire new customers at a lower price than you would otherwise.
- Utilize marketing automation — Marketing automation tools can reduce the amount of manual effort required for acquiring, nurturing and ultimately converting leads to customers. This allows your sales and marketing teams to focus on more high-value activities.
Increasing your conversion rate
Upping your conversion rate at each stage of the marketing funnel goes a long way in reducing your CAC and providing a superior experience to your customers, which in turn increases LTV.
A higher conversion rate translates into better B2B lead generation and more paying customers. You have to pay less to acquire new customers, and you can invest that extra capital in more marketing, which brings in even more customers. It’s a virtuous cycle, with each improvement in the conversion rate having a compound effect.
Read our 41 point ecommerce conversion rate checklist for more insights!
YOUR COMPETITIVE ADVANTAGE
Yes, it’s true that acquisition costs are rising. But this actually gives you a competitive advantage. When you have a clearly defined customer acquisition strategy, identify the most effective acquisition channels, and consistently improve your overall performance, you’re in a position to leapfrog those companies that don’t have clarity on these things.
So, do the work needed to implement a highly effective acquisition strategy, and you’ll generate more leads consistently for strong, robust growth.