Companies might be spending infinite time on building great products and services but the real challenge actually lies in acquiring new customers and retaining them long term. Not only is marketing becoming expensive but customers are also becoming less trustworthy of brands.
So the question is how to uncover new opportunities when the market is already so saturated? Let’s learn more about customer acquisition cost, what it entails and how we can tweak our marketing strategies to keep the business growing. Let’s explore in this article!
What is Customer Acquisition Cost?
In simple terms, Customer acquisition cost (CAC) is the sum of all the expenses required to win a new customer. Customer Acquisition Cost can be formulated as (Total Sales and Marketing Cost) / (No of New Customers)
For example, if a company has spent $500K on sales and marketing, and generated 250 new customers in a designated period of time (monthly, quarterly), their customer acquisition cost would be $2K.
In terms of acquiring new clients, some costs may be plainly obvious, while others lie beneath the surface. Business expenses can include-
CRM and Analytics Platform Cost
Marketing Spend (Ads – Google, Facebook, etc)
Content Production Costs (blog, social media, podcasts, videos, etc)
The cost per acquisition varies between industries and there are annual reports stating an average benchmark for each type of industry. Thus, to measure the ROI of your marketing efforts, calculating and evaluating Customer Acquisition Cost is a must.
How to gain new customers for your business?
Any business that intends to grow and succeed must acquire new customers, so having a new customer acquisition roadmap is a smart move no matter how many employees you have.
Content marketing should be at the heart of your marketing strategy to attract potential customers by offering them original content that answers queries shared by both prospects and customers.
It also helps build trust and cement a relationship with your target audience, thus increasing the company’s customer lifetime value.
According to a survey, content marketing generates about 3x as many leads as other traditional marketing methods and costs about 62 per cent less.
Companies have to constantly create and publish new quality content that includes blog posts, videos, ebooks, email-marketing and social media – and also refresh the old pieces wherever possible to keep your brand up-to-date.
Understanding the user persona of your brand is crucial before acquiring new customers else customer acquisition efforts can result in a waste of resources if they’re not targeting the right people.
Defining user persona by segregating their age, gender, demographics, occupation, income status, etc. can weed out any inefficient or wasted acquisition efforts.
It takes some time and thought to figure out what’s best for your business, resources, and audience in order to develop a targeted customer acquisition strategy. Defining and redefining your target audience through market segmentation is the way to go!
Create A Lead Generation Site
Your company’s website might look professional and aesthetically appealing but not necessarily generate new leads and acquire new customers.
You have less than 3 seconds to grab the user’s attention so it’s essential to create a landing page with call-to-actions to capture contact information in order to fill the top of your sales funnels.
To make a strong impact, use an attention-grabbing headline, a prominent lead form, and a contrasted CTA button. You can also showcase customer testimonials (review, interview, etc) to build a positive experience for prospects that helps them feel more confident.
Referral programs serve as the foundation of customer acquisition strategies, especially when it’s a budding company. We can offer current users incentives like physical gifts, monetary rewards or discounts to incentivize them to refer the company’s services to others, instead of expecting them to evangelize your brand on their own.
To create and run a referral program, we can use tools like InviteReferrals and Dropbox. These tools let companies create a referral program for our website, app, and social media platforms and can help them track their progress with ease.
It provides detailed analytics that can help us filter our traffic based on different channels. Dropbox also maximizes the value to be gained from the referral by offering both referral and engaging parties.
Improve Website and Email Engagement
While this may be a traditional marketing technique, it still remains one of the most effective customer acquisition strategies. It helps us stay in front of our target audience, promote our content, discounts, and new product collection, etc.
It’s also the easiest way we can connect with and acquire new customers. We can opt for customized emails like discounts, offers, engagement, product information and reminder emails.
For instance, big ecommerce companies like Amazon are always sending out customized emails to their audience, be it to remind them about the items on their wishlist or abandoned cart.
Make sure your SEO is up to date
SEO is a popular customer acquisition method because it’s relatively cost-effective and has the power to improve the rankings of our content on search engines, thereby making our content more visible and discoverable by our target audience.
Some of the SEO tactics include using industry-related keywords, backlinks from authority websites, uploading video and audio transcripts, alt text for images, etc.
Another effective SEO tactic that we can use to gain more customers is to optimize the site for mobile devices. Shopmatic also offers keyword-rich content to brands and helps us track our keyword rankings.
Customer retention is also as important as the cost of acquiring new customers vs retaining them is 5 times more and 90% of satisfied consumers are likely to purchase again.
For the smooth functioning of any business, a company needs to consistently acquire new customers as well as retain the old ones. While we’ve listed a few customer acquisition techniques to do so, they all have the same consequence, i.e. goal of purchasing new customers.