Customer acquisition cost, i.e., CAC, is calculated by dividing the total expenditure on sales and marketing divided by the new consumers acquitted over a period of time. This period could be a year, month, or quarter.
20 Customer Acquisition Strategies for Startups & SMEs
Learn the Different Customer Acquisition Strategies for your Business Today! Discover How to Increase your Lead Generation with these Tried and True Methods.
What is Customer Acquisition?
Customer acquisition refers to all the collective efforts and actions a company, business, or organization practices to attract and acquire new customers. The money invested in the customer acquisition process by a company in the form of a marketing funnel, brand awareness, or advertisements is called the customer acquisition cost (CAC).
Customers are vital for any business to strive, grow, and expand, and acquiring new ones is essential. Once new client acquisition is achieved, retaining and re-acquisition them becomes challenging.
The customer acquisition funnel
The customer acquisition funnel reflects how effective the customer acquisition strategies have been in converting the prospects into buying consumers. It helps to visualize customers' journey when they move through different stages of the purchasing process. An acquisition funnel could help companies or businesses improve their customer acquisition strategies by making necessary modifications to the customer acquisition process and consumer retention.
Types of customer acquisition
New customer acquisition always feels like a challenge. It takes patience, persuasion, convenience skills, and client knowledge for consumer acquisition. We are here to tell you five ways to make new customer acquisitions:
Telesales or telemarketing
Even though it sounds obsolete, telemarketing or telesales is used by many companies or businesses as one of the customer acquisition strategies. If you are a paper company, you could reach out to potential b2b or b2c clients through phone calls and pitch them your product(s). Based on the skill level of the sales agent, customer service, and client needs, you could convert the potential clients could be converted into buying customers.
Mailing by post, bulk mail, or e-mail
Sending out bulk e-mails, emailers, or posts is another way for consumer acquisition. Sending monthly emailers to existing customers could enhance customer retention. Sending our bulk e-mails or posts exhibiting the services, offers, or products a company offers could attract new consumers or clients.
Online marketing
Opt for online marketing if you don't want to push information on the consumers or users using the above two techniques. Consumers are looking for solutions to their problems online. Effectively using online marketing avenues like AdWords, search engine optimization, content marketing, social media marketing, etc., are novel ways of customer acquisition.
Acquiring customers through partners
A cost-effective way to attract more consumers or clients without building a huge market distribution channel is consumer acquisition through partners. You could team up with a partner on common grounds. The major drawback is finding the right partner. This strategy will only work as long it benefits both parties equally.
Referral marketing & recommendations
Referral and recommendations offered by your existing customers to their peers or friends is yet another way to attract new consumers. But you cannot force your existing customers to refer to your products or brand. Provide them exceptional customer service, product quality, and variety, influencing their perception and leading them to recommend your brand, service, or product.
How to create a customer acquisition strategy?
Here's a quick stepwise guide on forming customer acquisition strategies to benefit your business:
Amazon Business is a good customer acquisition strategy example. Exclusively targeting the procurement needs of business owners, wholesalers, sellers, schools, IT companies, NGOs, and other organizations. Amazon Business also aids SMEs and other businesses with their growth and development.
Strategies to acquire new customers
Now that you are familiarized with how to create customer acquisition strategies. We have a list of twenty client acquisition strategies that are tried and tested. In most cases, businesses, SMEs, or startups use a combination of these strategies to build their clientele.
1. Content marketing
Content marketing is suited for all kinds of businesses, be it small/ medium/ large enterprises or startups. It has the ability to reach a wider group audience. Content in any form facilitates brand awareness, drives website traffic, and grabs consumers' attention.
You could never go wrong with any form of content, be it blogging, infographics, video, social media, podcasts, e-books, case studies, etc. Consumers rely on content forms to extract information about the services, products, or brands they are unaware of.
2. Highly targeted advertising
Gripping the attention of your target audience is highly relevant. Highly targeted advertising is directed towards the audience with specific traits and behaviors. Personalized promotional message/ content is generated through targeted advertising hitting the right audience. An in-depth analysis of your consumers is integral to this approach.
3. Developing business partnerships
If you are short on resources, developing a business partnership is the way to go. Increasing the customer base by teaming up with the right partner is easy than doing it all by yourself. The challenging part is finding the right partner and reaching an agreement on what you can offer them and what you require from them.
Suppose you have a market research tool. By forming a partnership with a research company, you could use their skills in implementing online marketing while they use the tool for their in-house research purposes.
4. Create a lead generating site
Invest money in your website design to attract consumers and convert the visitors into leads. Unlike conventional websites acting as digital brochures, a lead-generating website has unique features like attractive CTAs, live chat options, testimonials, contact information, creative content, etc.
Browsing through the website should take consumers on a buying journey while grabbing their attention and building their trust. Get crafty with the product description and be transparent to snag consumers' attention.
5. Focus on benefits over features
Another user acquisition strategy is to focus on the benefits than the features. How does your product or service benefit the consumers? Why should consumers buy your product or service? Position your marketing and customer acquisition plan accentuating how beneficial your product or services are rather than stressing more about the features.
6. Be present on social media
Generating brand awareness and marking your online presence on social media is extremely important no matter what kind of business you are in. Social media platforms like Facebook, Instagram, Twitter, YouTube, etc., have a huge crowd pull.
Affiliate and influencer marketing via social media constitutes a good client acquisition strategy for generating new leads through creative content creation. Youtubers, influencers, and celebrities with a good number of followers can help generate leads through their content.
7. Make your brand known on forums
The more people hear about you, the possibility of generating leads increases. This extends to forums as well. Utilizing diverse online and offline forums would enhance the reach of your brand, service, or products. Say your company manufactures products with recycled plastics. You could attract more customers in green or sustainable development forums widening your reach among the target audience.
8. Define Your Target Audience
Target audiences are the most crucial element in client acquisition strategy. Identifying the right group or people, demography, or audience resonating with your company, service, or products is vital for any strategy to work. Conducting in-depth market research to understand and know the audience's traits, shopping behavior, and expectations will do good in forming a solid customer acquisition plan.
9. Use the Right Acquisition Channel
Even if you know the ideal customer for your products or service, the customer acquisition plans for your device will not stick if you are unaware of the right acquisition channels. Where your target audience spends their time extracting information? Which channels do they prefer more in comparison? All these questions have to answer to identify the right acquisition channels for your consumers.
10. Leverage Video Content
Among the content types, video content is preferred by most consumers. Marketers have relied on video content more to dissipate information and enhance brand awareness among the target audience. Go with creative video content and take the aid of social media influencers or your tuber to create video content to attract more consumers. Social media marketing delivering video content informing about your services, discounts, offers, or new product launch is more captivating.
11. Create High-Quality Content Regularly
Consumers are more information drive and are always looking for accurate and reliable content online. Content marketing is an effective user acquisition strategy, but no content is evergreen. With the socio-political, cultural, and economic climate changing around us, timely updating and generating high-quality content within context is highly relevant for content marketing to dig its claws deeper.
12. Create Optimized Landing Pages
Landing pages are significant in directing the consumers to your service or product. Therefore, optimizing the landing page is crucial. Design an interactive landing page with a compelling call-to-action. Knowing your customer's mindset and anticipating their need is important here. Suppose a customer lands at a t-shirt designing website. If the page displays a small tutorial video of how it could be done followed by a t-shirt designing option would attract the user's attention.
13. Offer deals and promotions
No better way to woo your consumers than compelling deals, discounts, or promotions. Getting a good deal on products consumers have been eying for a while encourages them to buy these products. Promotional offers are a good user acquisition strategy encouraging future purchasing from consumers. They will come back to buy more if some promotional events in the run in the offline or online stores. Check out our Corporate Diwali Gift ideas for your consumers.
14. Run giveaways
At times it becomes to sway customers with influencer or word-of-the-mouth marketing techniques. They need something beyond trust or promises to invest in your product or services. Running giveaways campaigns is one way of doing that. As social media reach is extending, running online giveaways is easy. To build loyalty, give the consumers a chance to experience your products or service.
15. Showcase testimonials
Most consumers rely on reviews before they try a brand or product. Therefore, showcasing customer testimonials is a good way of convincing potential consumers. Including review sections or testimonials on your website or social media platforms is a good way of communicating the raw opinions of the existing consumers.
16. Keep track of the competition
Nobody can motivate you more than your competitors. Keep track of your competitors and observe how they are acquiring new consumers. Learn from their mistakes and improve on your customer acquisition strategies. Offer something different than your competitors to pull the crowd toward your product or service.
17. Host an event
Hosting online or offline events is a good way to find potential leads. Cosmetics companies often run free makeover drives showcasing the product quality, coverage, and color palette on different skin tones in malls or stores to attract consumers. Similarly, you could host an event showcasing a new product launch through a treasure hunt, trivia game, or other games to make with assured giveaways for the winners.
18. Ask for referrals
Word-of-the-mouth is a very powerful way of marketing and ensuring leads. Similarly, you can run referral programs for the existing consumers to bring in new consumers in return for some incentives or offers on the next purchase. Seeking consumer helps for new customer acquisition is what referral does, just like referring an employee to a firm you are employed in.
19. Make sure your SEO is up to date
Content creation without SEO won't do you any good. Regardless of the form of content, be it company blog, website, social media posts, or case studies. Reoptimizing content is essential for content marketing to stick and drive website traffic and google ranking. Ensure your SEO is updated periodically. Reoptimize the content across platforms with new keywords and catchphrases.
20. A/B test everything
Optimization is essential to pull the customers. A/B testing ensures that various aspects of your business are optimized per the customer's requirement. A/B testing is beneficial in website design and content functionality with respect to website visitors or potential leads.
How do you retain acquired consumers?
Acquiring more customers or clients is always exciting. But the real challenge is retaining customers. A good customer retention rate enhances the customer lifetime value (LTV), which could also lead to new consumer acquisitions. For startups and SMEs, retaining customers carries equal weight as expanding the customer base through new client acquisition.
The next obvious question is how to ensure customer retention. Knowing your consumers, their requirements, and their needs are crucial to planning customer retention. Some of the approaches used to enhance consumer retention are discussed below:
Convenience
Take measures to improve and enhance customer convenience. Amazon is one of the best customer acquisition strategy examples to quote. Amazon makes the shopping experience very convenient for its customers with guaranteed delivery, easy returns, 24/7 customer service, and products ranging in cost. Not only has this convenience helped with customer retention, but it has also led to an increase in the customer base.
Altruism
Rather than using some tactics, inspiring your consumer through your mission could enhance customer retention. For instance, a footwear company using used shoes as raw material for their products with a mission to reduce wastage and promote sustainability could attract consumers easily and make them loyal to the cause.
Personalization
Personalization is yet another approach to retaining acquired customers. It prioritizes consumers and their demand with the kind of individualistic flexibility and makes modifications on demand. Asking your consumers about their preferred payment channel, option to customize the products, service flexibility, gift wrapping, etc., are some ways to enhance personalization.
How to calculate customer acquisition cost?
Customer acquisition cost (CAC) is crucial metric companies or businesses use to determine the resources, tools, or staffing required for new client acquisition leading to the company's growth and development. Understanding CAC is relevant to ensuring your company is extracting profit while acquiring consumers.
CAC represents the cost incurred by a company or business to covert a potential lead into a customer.
Here's how you can calculate the CAC:
- Set the time period for evaluating CAC, i.e., month, quarter, or year
- Calculate the total marketing and sales expenses
- Divide the above number by the total number of new consumers acquired
Customer acquisition cost = Cost of Sales+Cost of Marketing
New consumers acquired
The marketing cost includes money spent on advertisements, employee salaries, creating content, technology, production, publishing, and inventory maintenance.
What are the benchmarks for average customer acquisition cost?
The average customer acquisition cost (CAC) varies across industries. Thus, the benchmark for the CAC is different for different industries. Ideally, the benchmark ratio between customer lifetime value (LTV) and customer acquisition cost (CAC) is 3:1, implying the money spent on LTV is three times more than CAC.
Factors like the purchasing frequency, customer lifespan, length of the sales cycle, purchase value, company maturity, etc., determine the average CAC across industries. The following table will list the average consumer acquisition cost for some industries:
Industry |
Average CAC (in dollars) |
Consumer Goods |
$22 |
Transportation |
$98 |
Manufacturing |
$83 |
Marketing Agency |
$141 |
Finance |
$175 |
Travel |
$7 |
Retail |
$10 |
Banking or Insurance |
$303 |
Telecom |
$315 |
Customer Acquisition vs. Retention
Most companies or businesses focus on the customer acquisition process and customer acquisition plans paying relatively less attention to customer retention. Why is that? Because of two reasons mainly:
- Consumer acquisition enhances the vanity metrics
- The results of customer acquisition are more evident compared to retention
But for any company, startup, SME, or business to grow, new client acquisition and retention are relevant. Let's understand what makes them different and the element they focus on:
Customer Acquisition |
Customer Retention |
Focus on identifying potential customers |
Focuses on customer service |
Involves designing and implementing customer acquisition strategies (i.e., marketing channels) |
Involves enhancing product quality, products, and services |
Process of converting leads to paying customers |
Focuses on creating a customer-centric environment |
Involves evaluating and measuring the success of strategies |
Increasing customer loyalty through newsletters, exclusive discounts, and other loyalty programs |
One of the biggest attractions of Amazon is its client base and customer retention capacity achieved through exceptional customer service, product line-up, and shipping.
Conclusion
Consumers are vital for any business, startup, or SME to find a strong footing. Business growth is difficult without convincing the end-users about your products, services, or items. Therefore, building effective customer acquisition strategies is equally significant as business planning. Picking appropriate customer acquisition strategies and identifying the right marketing channels for your business, emphasizing the needs of the target audience, will benefit your business. But remember, to build a loyal and consistent customer base, retaining them is crucial with quality service and assistance. Consumers are always looking for something how to channel correctly, and utilizing this search is up to you.
How can Amazon Business help you in acquiring new consumers?
Growing business and expanding the consumer base is the dream of all business owners, startups, or SMEs. To acquire new consumers, businesses need to ensure the quality of products, exceptional service, and timely response and delivery. Amazon Business is your one-stop online destination to manifest the needs of your consumers. With an Amazon Business account:
- You could sell your product and expand the customer's reach
- The fast delivery, shipping, and product quality will boost consumer's trust
- Buy products in bulk at discounted price for your business
- Extended product listing satisfying different consumer needs like IT products, electronics items, security systems, laptop accessories, etc.
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