Paying customers are the lifeblood of any business, no matter what industry you’re in or what profession you’re in. While every business owner and manager pays attention to customers, not everyone looks through the lens of a solid customer acquisition strategy.
With a customer acquisition process in place, you’ll be better able to turn your revenue into a more predictable, repeatable process instead of a random one. You’ll also have a better idea of how it all relates to your finances, including average profit per customer vs. how much it costs to acquire customers and earn their loyalty.
If you’re looking to build a customer acquisition plan, you’re in the right place. In this article, we’ll look at what it is, how to calculate it, and how you can start implementing a customer acquisition strategy today.
What is customer acquisition?
Literally, customer acquisition is the process of converting potential customers into paying customers. But in reality, there is much more to a customer acquisition strategy.
It’s a measurable, repeatable marketing process that captures a prospect’s attention, moves them through the buying cycle, and turns them into a long-term paying customer.
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The customer acquisition process is often divided into three stages.
- awareness. A lead discovers your brand and shows interest.
- note A lead becomes a prospective customer when they start researching and making a purchase.
- Transformation. A prospective customer turns into a paying customer. At this point, the brand can shift its marketing efforts toward retention or long-term earning customer loyalty.
A successful customer acquisition strategy takes all these stages into account, implementing customized marketing practices and monitoring the user experience every step of the way.
Calculating Customer Acquisition Cost (CAC)
Every business should understand how to calculate their customer acquisition cost (CAC). That’s how you get to know if your marketing approach is profitable.
To determine your CAC, divide the total marketing cost by the number of new customers acquired.
Customer Acquisition Cost Formula. Total marketing spend / total new customers
Let’s say our LinkedIn page brings in 15 customers per month and you spend $200 to develop content. Your CAC would be: $200 / 15 = $13.33 per customer.
Once you calculate your CAC, you can use it to calculate your profit on each order.
For example, if a customer spends an average of $70 when they buy from your business, and you keep a 50% margin on each order, your profit would be:
$70 (Average Order Value) x 50% (Gross Margin) – $13.33 (CAC) = $21.67 (Profit)
You can learn our customer acquisition cost for various marketing initiatives using tracking/reporting tools such as Shopify Reports.
6 Customer Acquisition Strategies You Must Try
Ready to start your own customer acquisition efforts? Let’s take a look at some of the best tried and true methods used by brands around the world.
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Email marketing is one of the most profitable forms of marketing. Statista’s data shows that brands in the retail, e-commerce and consumer goods industries saw huge revenue gains $45 return on investment (ROI) for every $1 they spent on email marketing.
First, you need to create an email list. You can do this through flyers and newsletter sign-up forms on your website, and through events such as contests and giveaways through your website and social media.
Once you’ve built your list, there are many ways to use email to build relationships with leads, including:
- Newsletters. Keep customers informed about what’s happening in your business. Discuss news, new product releases, and get creative with behind-the-scenes content like how your products are made and who your team is.
- Actions: Do you have a sale or event coming up? Generate interest via email.
- Transactions. Use registration and purchase confirmations as sales opportunities upsell, and cross sell more products.
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2. Content Marketing
You know the saying “Content is King”. Especially in today’s world where users spend hours a day consuming content from websites, social media and streaming services.
a A solid content marketing plan it’s necessary if you want to grab people’s attention, engage them and convince them to go and buy.
Your content marketing plan may include:
- Bloggers: Write useful and interesting articles about your industry, products and topics related to your product. For example, if you’re a beauty brand, you could blog about skin care tips and offer makeup tutorials.
- Social media. Create posts, videos and interactive content related to your brand. Be sure to back it up with user engagement, such as replying to every comment and leaving comments on other posts to stand out.
- Other forms such as podcasts, print publications, apps, press releases, etc.
Beauty brand Beauty pie blogs about everything from customer highlights to skin care to research supplements that debunk myths in the world of beauty.
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Influencer Marketing: is a massive industry, especially on social media apps like Instagram, Facebook, and TikTok. With this customer acquisition channel, brands partner with influencers to promote their products or services. By definition, an influencer is an online personality or organization that has a loyal, engaged following.
If you find the right influencers to partner with – those in your niche and relevant to your brand – you can get in front of hundreds or thousands of potential customers.
You can get an influencer to create content about your brand or products in exchange for payment or free products. You can also try affiliate marketingwhere influencers cut your sales.
Just be careful of traps. it can be difficult to track the ROI and you need to make some investments up front.
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4. Traditional advertising
Advertising is not dead. You can still use customer acquisition channels like print ads, TV ads, billboards, and direct mail. These will, of course, depend on the type of business you have and the ROI potential for using these less scalable, more geographically targeted techniques.
This will have some compromises. for example, you won’t be able to track impressions, views, and engagement with your physical ads the way you can with digital marketing techniques.
But you can use omnichannel marketing tie it all together. For example, a print ad that drives customers to your website or app and into your digital funnel.
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5. Audience building
Through social media platforms like YouTube, Instagram, and Twitch, e-commerce brands have been able to build massive online followings of potential customers.A real world example Gymshark.
Gymshark has over six million followers on Instagram and has cultivated a community of brand ambassadors who endorse the brand everywhere.
This not only gives it brand recognition, but also creates a customer base that Gymshark can reach out to when it wants to increase sales or promote a new product.
Although most audience building strategies require time, effort, and consistency, they are often considered valuable because they can help you build a pool of customers that you can reach at any time for free.
6. Paid advertising
Paid advertising has emerged as a popular way for e-commerce brands to attract new customers.
Paid advertising offers several benefits that can help businesses grow quickly, such as boosting your brand exposure and offering targeting capabilities that allow you to tailor offers to people’s interests and behaviors. So it’s no surprise that many e-commerce companies use them as part of their customer acquisition efforts.
For example, a makeup brand More shiny uses Facebook advertising to find new customers online.
While Facebook and Google reign as the most popular paid advertising platforms, there are other options to consider. Choosing a website depends on understanding your audience and where they spend their time online.
Build the process, reap the benefits
When you approach it thoughtfully and methodically, a customer acquisition strategy can have huge benefits for your business. You’ll be better able to systematically get customers out the door and keep them coming back for more. You’ll also gain a better understanding of financial components such as your customer acquisition cost and how it relates to your bottom line.
All you have to do is start building your plan, implement the steps and measure your results, then keep repeating the process, improving a little more with each cycle.
Customer Acquisition FAQ
What is a customer acquisition strategy?
A customer acquisition strategy is a plan to attract and convert potential customers. It involves using different tactics tailored to the preferences of your target audience to guide them through the buying process. The goal is to capture their attention and turn them into loyal customers.
How does customer acquisition differ from customer retention?
Customer acquisition focuses on identifying and converting new customers while customer retention The process of satisfying and nurturing existing customers to ensure repeat business. Both are critical to business growth and sustainability, but they require different strategies and tactics to succeed.
What are the best customer acquisition tools?
- Shopify emailThis is an email marketing software designed for e-commerce stores. You can use it to create elegant, branded emails to send to your subscribers.
- Shopify Inbox: A free Shopify plugin, Shopify Inbox allows you to convert visitors into customers through real-time chat. You can send discounts and recommendations from your Shopify store with just a few clicks inside chats, turning browsing sessions into purchases.
- Referral CandyThis is a tool to create referral products for your business. You can use it to create fun, engaging loyalty programs that help you reach new customers through word of mouth.