Successful businesses learn the best ways to gain a loyal following and discover strategies to continue gaining customers. Expanding your business takes effective marketing and networking. When you combine work ethic and a willingness to try different strategies, your business will continue to acquire new customers and benefit your business now and in the future.
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In this article, we discuss what customer acquisition is, customer acquisition strategies and how to calculate customer acquisition costs.
What is customer acquisition?
Customer acquisition is the process of attracting new customers to your business products or services. The goal for your business should be to have a sustainable and systematic strategy that will continue to grow with future business trends, shifts and changes. Attracting customers and developing relationships with those customers brings growth and loyalty to your business.
7 customer acquisition strategies
Here are seven strategies you can utilize to acquire new customers:
1. Define your target audience
Define your target audience by conducting market research about other businesses that offer similar products and services. Note who their business model attracts and which platforms they use that have the largest number of followers and active customers. This will give you a general idea of the common characteristics, demographics and behaviors of your target audience.
After you attain this information, develop a plan of how you can attract your target audience to your business and consider whether or not there is a niche market that your competitors may have been overlooking. You may also try analyzing your current customers and think about their common characteristics, interests and why they buy from you. Identifying these key things will give you a more comprehensive outlook on how you can acquire new customers.
2. Gain awareness of your brand
In the digital age, the best way to gain brand awareness is through the use of digital media. Social media presence and partnerships with larger brands may assist with gaining brand awareness. It is helpful to interact with your customers and audience on a personal level and social media allows you to do so. Another key to brand awareness is being consistent with your digital marketing and content production. This helps your customers see you as a reliable brand, build trust with you and be more likely to return.
3. Maximize referrals
Referrals and word-of-mouth marketing are still credible and worthy methods of customer acquisition. Past work can leverage your chances of acquiring new customers through other returning customers. To maximize referrals, you may provide excellent customer service, encourage social media sharing or offer referral incentives to current customers and referred customers.
For example, a car service business provides 10 dollars off of a customer’s next ride if one of their referrals signs up for the service. Your customers will often be motivated to share great services if there is something in it for them or if there is something your business offers above their general expectations.
4. Offer discounts
Offering free items or deeply discounted items will help create more brand awareness and will allow prospective customers to try products before they buy them. This should be done in a way that inquires the least amount of cost for your business. For example, some businesses offer free shipping or a free item with a purchase to first-time customers. You may also provide discounts or free items to influencers on social media who will market your product for you in exchange for the free or deeply discounted product or service. Offer great service and build the value of your product or service and you will likely gain a loyal customer.
5. Get involved in your community
When you offer your products or services in your community and speak at small local public events, you have an opportunity to make connections and establish yourself as an expert and leader in your industry. Some events may not offer you compensation, but you can gain a loyal following from those in your community that will benefit you in your future success.
6. Market customer success
A great way to acquire new customers is to gather testimonials from currently satisfied customers. For example, you may try asking your customers for reviews of your products and services. If they are deeply satisfied with your business, you may also ask them if you can display their testimonials on your website. This builds trust and credibility within your field and will likely give new customers a good reason to purchase your products or services for the first time and see the quality for themselves.
7. Leverage your existing network
The best customers you will have are the ones who are currently in your network. Market your products to them and show their value. They are likely ones who will want to support you and provide word-of-mouth referrals without any expected incentive. Referrals from personal contacts is an important customer acquisition strategy that can be continued throughout your business as you develop new products and services.
How to calculate customer acquisition cost
Customer acquisition cost is the expense you acquire when you bring a new customer to your business. This includes marketing costs, advertising and events. CAC is generally calculated according to specific timeframes or campaigns, and it is important because it allows you to measure the true cost of your marketing efforts. When you know which marketing effort brings your business the best return on investment, you can reduce spending to other marketing efforts you may have tried. Before you calculate customer acquisition costs, ask yourself these questions:
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How often do your customers make purchases on average? For example, there is a difference between purchase frequency at a luxury car dealership and a coffee shop. This may affect your CAC calculation.
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Does your company spend money on marketing efforts that are projected to pay off in future quarters? For example, if you invest in a Q4 campaign but pay for it in Q2, you likely aren’t going to acquire new customers by the end of Q2, which may have an effect on your Q2 CAC calculations.
Customer acquisition cost is calculated by dividing marketing costs from a specific timeframe or campaign with the number of customers acquired from the campaign. The basic example of a CAC formula is CAC = MC / CA.
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CAC = customer acquisition cost
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MC = marketing costs
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CA = customers acquired
If you’d like to gain a more in-depth perspective on customer acquisition costs, then you need to include each cost associated with the marketing spend. A simple formula may be applied to a specific campaign, but the complex formula should be calculated with a specific timeframe, such as a month or a fiscal year. This includes campaign budget, marketing salaries and overhead costs. An example of the in-depth formula is: CAC = (MC + W + S + OS + OH) / CA.
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W = wages for sales and marketing representatives
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S = marketing and sales software
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OS = outsourced services
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OH = overhead costs for sales and marketing
I hope you find this article helpful.
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