Customer acquisition is the engine that drives your brand and your business.
However, marketers are experiencing a raft of issues right now which makes bringing new customers into your business increasingly difficult.
So, what exactly is customer acquisition? And what are some of the challenges and strategies that marketers are looking to deploy in a rapidly changing market?
In this blog we take a detailed look at the topic, including:
- What customer acquisition is – and why it’s important
- Customer acquisition channels
- The customer acquisition funnel
- Customer acquisition strategies
- Customer acquisition challenges
- How to measure customer acquisition
- Tips to improve your customer acquisition
What is customer acquisition?
Customer acquisition is the process of attracting, engaging and convincing prospects to buy your product or service.
Why is customer acquisition important?
At the most fundamental level, customer acquisition drives sales and revenue which are key components in the overall profitability of your business.
It also drives strong brand awareness which can help fuel your growth.
Customer acquisition drives the financial lifeblood of your business. The reality is that no customer stays with you forever, and attrition and churn are simple facts of life.
So, having a customer acquisition strategy in place to continue to drive the revenue and growth of your business is essential.
What are customer acquisition channels?
There are a number of customer acquisition channels you can take advantage of, including:
- Paid search – Paid search in its various forms, which range from PPC (pay-per-click) to display ads, enables you to quickly get your product or service in front of audiences based on what they are searching for. This is achieved by allowing you to bid against specific search criteria and have your search result appear before organic search results.
- Organic search – with Organic, the focus is more on creating and optimising website and other content specifically for your target audience, so that you rank highly on search engines results pages (SERPS) on major search engines like Google and Bing.
- Organic social – is typically an ‘earned’, higher funnel activity aimed at boosting brand awareness. Although, it can also work further down the funnel as customers choose to follow your brand over time. One of the big attractions here is the impact that likes and shares by your target audience can have on your social posting as your audience shares content with their peers.
- Paid social – this has become an increasingly important tactic for a really significant number of brands in recent years, with the meteoric rise of social advertising opportunities like Facebook ads. For brands with deep pockets, it can be a quick way to acquire audience and followers but high levels of CPAs are changing the picture here quite markedly.
- More traditional media options – for many marketers, more traditional media options such as TV, radio and print media are still an important part of the media mix. For example, for brand owners looking to penetrate audiences in a specific local area. Or for larger brands that are running national level campaigns or with a specific multi-region focus.
- Referral marketing – for many brands the cost of customer acquisition is relatively high, so their focus is on ensuring that customers have an exceptional experience with the brand which makes them pre-disposed to referring friends and peers. And a recommendation from someone who is already using your product or service is a powerful potential marketing tool.
- Affiliate marketing – allows you to tap into traffic and audience from a network of affiliate partners who are paid a commission in return for conversions, or sales, of your products or services. Again, it can be particularly powerful as your target audience hear about you from affiliates that are well positioned in their spheres of influence.
- Email marketing – many of the channels listed above are a great source of very early-stage prospects and email is still a particularly effective tool for targeting these contacts and converting them into customers.
- Events – both and offline events are a great way to acquire new prospects for your brand. There has been an explosion in webinar and other live online style events due to the widespread availability of low-cost technology to deliver them. And they give a high degree of convenience for attendees. While brand owners benefit from a relatively low cost acquisition channel where the key requirement for entry is an email address to receive the webinar invite – that can then be used for targeted marketing. But offline events like tradeshows and conferences also offer a similar opportunity.
The customer acquisition funnel
To be effective in targeting of prospects, many marketers use a customer acquisition funnel that enables them to track users through the various stages of the buying stages.
Below is an example of a funnel, which marketers cast in various different ways, but essentially tracks the user from early awareness of your brand down through stages like interest, consideration and intent to evaluation and purchase.
This journey sees them move from lead to prospect to customer and provides an outline framework that marketers can use to develop targeting strategies at each stage of the process.
What is a customer acquisition strategy?
Customer acquisition strategies bring together the best techniques and media channels into a mix that is designed to deliver new leads and customers by targeting them on their digital and offline journeys.
7 examples of acquisition strategies
Here are some examples of the type of customer acquisition strategies to consider:
1. Content marketing
Successful content marketing is a strategy that enables you to not only acquire customers but also to engage and retain them.
It involves clearly defining audience personas for buyers of your product or services, including understanding their issues and needs.
And then creating a programme of highly engaging, ‘free’ content on the topics that keep them awake at night – that will attract them to your brand and encourage conversion.
The strategy is a great way to establish your authority and ensure you are top of mind as they consider purchase options.
2. SEO (Search Engine Optimisation)
According to the Google/Ipsos retail study, 51% of shoppers use Google to research the purchases they are going to make online.
So, ranking well in Google searches for the type of terms your audience is interested in matters.
A structured approach to SEO is not something to be taken on lightly and is more of a medium-to-long term strategy.
But it can pay real dividends which are repeatable, if properly implemented.
Successful strategies have typically revolved around the three key pillars of technical optimisation of your website:
- technical optimisation
- keyword optimisation
But with the advent of Google’s E-E-A-T guidelines the focus has turned firmly to creating content that provides Experience, Expertise, Authoritativeness and Trustworthiness to ensure your content ranks well.
So, having either an experienced SEO agency, in-house team or both is key to success here.
3. Run paid advertising campaigns
The proliferation of different advertising opportunities across platforms like Google and Facebook have made this a popular choice for acquisition amongst marketers.
Particularly those with the type of sizeable budgets that are needed to make an effective ‘go’ of the strategy.
If you are looking for a strategy that can help scale your business quickly, providing rapid and easy access to online audiences, it has to be a key consideration for your brand.
One of the big attractions of this approach, has been the extended targeting capabilities that are available on interest and behavioural dimensions.
However, it is also worth pointing out that advertising opportunities on platforms like Facebook were severely impacted by the Apple iOS 14.5 update – where the conversion analytics data available was reduced significantly.
4. Influencer-led marketing
We live in a world where the impact of influencers across channels like YouTube, TikTok and Instagram can be significant for brands that are able to harness the potential in the right way.
It is a strategy that can be particularly powerful for brands that are starting out, if the fit between brand and influencer is a good one.
The approach enables you to deliver your messaging and offers via a trusted intermediary that has an active and engaged following and that can help position your brand in the right way with your target market.
While this type of approach can put your brand in front of hundreds of thousands, or even millions, of followers it is worth noting that this type of activity can be difficult to track in terms of hard conversion impact.
You also need to tread carefully as you are effectively aligning your brand with a third party which you may have limited control over in future.
5. Social media marketing
Social media marketing is another strategy that can really pay dividends given the right planning and approach.
The key thing here is to be really clear about your audience and where they are on social so you can plan to reach them effectively.
For example, 61% of Instagram users are in the 18-34 age bracket, ideal for brands offering cosmetics, fashion and accessories for that age group but perhaps less relevant for brands offering senior travel insurance and hearing support products.
Another key consideration is that social campaigns can be very content ‘hungry’ and you need to be posting highly relevant content on a regular basis.
So, think carefully upfront about how you are going to curate and produce content to feed your social channels.
Social works really well for brands that are growing quickly and that have a quirky positioning – as typically in these types of businesses there is a lot of internal social content that can be surfaced and released out to your audience.
6. Run email nurture campaigns
Whilst email marketing campaigns have been beset by a number of issues from an acquisition perspective, not least the challenges that were created by iOS 15 , it remains a really powerful tool for nurturing and engaging prospects that you are collecting through your acquisition activity across other channels.
The reality is that most first-time visitors are unlikely to buy on their first visit.
So, creating a schedule of integrated email marketing content, offers, tips and advice can be a great way of ensuring you are top of mind as they make purchase decisions.
And, also, a great way to leverage the investment you have already made in collecting email addresses via your other paid acquisition activity.
7. Start a referral campaign
Tapping into the benefits of personal referrals can be a strong driver for acquisition in your business.
People have always placed high value on the opinion of their peers when it comes to selecting the right type of product or services.
But advances in social media and online technology have made it easier for customers to share recommendations with their personal networks and for marketers to track the effectiveness of them.
Starting a referral campaign where customers are rewarded with discount codes, vouchers and other incentives can be a relatively low-cost way to drive up new customer acquisition.
But central to this strategy is ensuring that your customers have an exceptional experience.
If they aren’t in love with what you do for them, then they are less than likely to refer you to a friend.
So, this type of activity is wrapped up with a wider approach to ensure you are delivering value for existing customers as a means to attracting new ones.
Customer acquisition challenges
These can be many and varied, depending on your own marketing circumstances, but here a few that we consistently come across with our customers:
Lack of an accurate analytics view on performance
One of the fundamental issues that marketers have is that they lack the type of effective measurement view needed to assess the effectiveness of their acquisition efforts. In fact, QueryClick’s research uncovered the fact that over 60% of marketers believe that the data to support cross-channel decision-making is broken.
And the work we have done with our own clients bears this out, as we have uncovered the fact that data from analytics tools like Google Analytics and Adobe is 80% incorrectly attributed due to the limitations in data collection from cookies. Which highlights the need for effective attribution as a cornerstone of your acquisition strategy.
But by effectively rebuilding this broken data from the ground up – and correctly stitching together a more accurate view – it is possible to have a clearer measurement view to base your decision-making on.
This is the approach Corvidae takes and is shown in the example below:
In this instance, Corvidae helped our client gain a more accurate view than Google Ads, to reallocate spend from poor performing campaigns to the best performing campaign in this set – taking 22% of media spend that’s wasted and generating an extra £1.4 million a year of revenue.
Analysis that helped our client to really refocus their acquisition strategy.
Concerns about AdTech data bias
One of the concerns that marketers have right now, is how much they can trust the data that is being put in front of them by the big AdTech players regarding their acquisition activity.
In fact, our own research points to the fact that 80% of them have real concerns about bias in the reporting they are receiving.
And the issue is only being exacerbated by the ‘walled garden’ approach that platforms like Facebook have to data sharing.
Or the lack of it.
Take the example below, where a client asked us to validate the figures they were getting from Facebook analytics around attributed revenue.
In this case, not only were Facebook reporting 68% more revenue than was properly attributed by Corvidae. But an incredible 34% of spend was not optimal and Corvidae was able to identify that re-allocating it would generate an additional £1.6m.
ROI from Paid Media is decreasing
As Forbes has pointed out, marketers focused on acquisition are also fighting a constant battle against rising ad costs.
With some specific instances involving Facebook ad CPA rises of as much as 89% in certain sectors.
While TikTok has seen instances around the 92% level.
The effects of increased competition for space continue to keep the pressure up here and it means that 53% of marketers are concerned about the continuing rise in costs.
With a paltry 16% seeing increased ROI from this heavy increase in spend and costs.
The reasons for this are complex but include lingering effects from the pandemic, the continuing impact of iOS 14.5 (and subsequent Apple updates) and a market that is uncertain as Google continues to experiment with cookie replacements.
Lack of a joined-up view right across the customer journey
One of the fundamental challenges marketers face around acquisition is getting a single, clear picture of the effectiveness of ALL of their media efforts – right across the customer journey.
These journeys are increasingly complex, taking place both on and offline, and involving a wide range of media from early stage influences like TV/Connected TV advertising, OOH and digital display down to retargeting activity at the bottom end of the funnel.
Layer in the complexity of digital activity that takes place across a range of devices at home, and at work – including mobiles, laptops, desktops and tablets – and you have a patchwork of activity that is difficult to unravel.
Add in the fact that, for many brands, there are a number of internal teams involved from SEO to Paid Social to Programmatic – all with their own data sets, and all effectively marking their own homework in performance terms – and you can see how this is difficult to achieve.
How to measure customer acquisition
The real test of your customer acquisition strategy is how cost-effectively you are bringing new leads into your funnel.
This can be measured using Customer Acquisition Cost (CAC) as a metric.
CAC essentially measures how much you are spending to bring new customers onboard.
It matters as a metric as it is one of the keys to building a sustainable growth strategy for your brand and it is highly likely that your CFO is going to want to know how you are performing in this area.
For funded businesses, it is also likely that investors, and potential investors, are going to be keen to understand performance here as it gives them a good understanding of the viability and longer term potential in your business.
How you choose to measure CAC, and what you choose to include in your calculation, is going to be specific to your own circumstances.
But in broad terms you are going to want to lump together all sales and marketing costs and divide them by the number of customers that are acquired in a formula that looks something like this:
Customer Acquisition Cost = (MC + SC)/CA
So, if, across a defined period, you are running at:
- Marketing costs = £10,000
- Sales costs = £5,000
- 100 new customers
Your CAC from a marketing perspective is going to be £150.
Whether that is sustainable for you is going to tie back into other calculations around overall profitability, to including looking at Customer Lifetime Value (CLV), to really assess what is working and not.
5 tips to improve your customer acquisition
To be successful, marketers need to be constantly refining and improving their customer acquisition strategy in what is a highly competitive business environment.
Here are our tips for staying ahead of the pack with yours.
1. Effective attribution is the game-changer
We have been using AI for a number of years to improve the quality of marketing attribution for our clients.
One of the key attribution challenges is that solutions like GA and Adobe, which rely on cookies for tracking, actually do a particularly poor job of tracking multi-session, multi-device journeys.
And this results in around 80% of data being incorrectly attributed for attribution purposes.
This is why we developed Corvidae, our own attribution platform, which uses a combination of AI and Machine Learning to effectively replace cookies and rebuild this data from the ground up.
Giving our clients not only a much clearer view of what is and isn’t working in their campaigns but also very specific predictive suggestions for how they can re-allocate underperforming spend to optimise their revenues.
2. Stay well ahead of changes where you can
Your market acquisition strategy doesn’t operate in a vacuum.
The reality is that it is going to be impacted by everything from industry-wide changes to big swings in the strategy of your competition.
And, in a lot of ways, the move to digital marketing being the dominant media and channel choice has exacerbated this.
For example, the decision by Apple to release iOS 14.5, asking users to opt-in to receive targeted ads, had profound effects on the targeting and measurement capabilities for brands that were heavy users of Facebook advertising in their marketing mix.
And the ones that fared better when it happened were the ones that had a front-facing view on their acquisition and media strategy.
The impending removal of third-party cookies – which has been delayed by Google more than once – is ultimately coming and will have serious consequences for marketers that rely heavily on cookie-based solutions for targeting and measurement in the acquisition marketing strategies.
Our own research on this topic suggests that many marketers are going to look to rely on solutions like Google Analytics ‘post cookies’, which has been dogged by concerns around illegality in the EU.
As many as 85% of marketers believe there are sufficient cookieless solutions out there to navigate the change – with 43% sleepwalking into the opt-in problem which is presented by Google’s Topic and Fledge APIs and 38% placing bets on Unified Attribution platforms despite the GDPR issues surrounding them.
3. Play your media cards away from the competition
One of the consequences of the raft of recent industry-wide changes has been to heighten competition and huge hikes in media costs.
By their very nature, the advertising opportunities provided by the big platform providers like Google and Facebook tend to be heavily focused on targeting prospects at the bottom end of the funnel.
This is partly because that’s the part of the funnel that the proprietary reporting and analytics tools that are built into these platforms can measure effectively – as measurement of higher funnel activity is problematic for them due to limitations in cookie-based measurement.
All of the above has combined in recent times to increase the level of competition for media space at this end of the funnel delivering huge increases in CPAs for this type of media.
The only solution for marketers looking to do something different in their acquisition strategy is to find a way to move further up the funnel where CPAs are cheaper and the market is less crowded.
This is the approach we took for a major electronics retailer as outlined below using the Google ‘See/Think/Do/Care’ model.
By using AI and Machine Learning techniques, like the ones used by Corvidae, it was possible to target users further up the funnel at the ‘See’ phase – where CPAs are much lower.
In fact, this is the type of approach that enabled us to reduce CPA by 87.5% for a major European Electronics retailer.
4. Focus on keeping the customers you have – and help them to help you
In anyone’s language customer acquisition can be a costly business these days.
And high levels of churn can cause customers to quickly come and go from your business – for a raft of reasons from poor customer service to issues with product quality – which can quickly reverse any acquisition gains.
So, the focus needs to be on keeping your churn metrics to a minimum.
You also work hard to bring new customers to your brand, and they are a valuable resource for it. Not just in revenue terms but as potential informal ambassadors for your business.
So, work heavily on getting them engaged with your brand.
Help them to understand your unique values and what it is that sets your brand, and your product or service offerings, apart.
As they better understand what you stand for, you build loyalty that transcends the transactional nature of your relationship.
And it is more likely that they will be able to tell your story to their friends and colleagues – and your business will feel the revenue impact of referral style marketing.
5. Don’t put all of your marketing eggs in one basket
If there is one thing that the last few years has taught marketers, it is to expect the unexpected – and to make sure you have options in case the landscape suddenly changes.
Having a breadth of proven media in your marketing mix is essential, particularly where the emphasis is heavily on digital where the opportunities and competition levels for space are changing all of the time.
The broader the spread of channels you have – or have validated as effective for you – the more flexibility you have to push spend around as things change.
And, as we pointed out earlier, effective marketing attribution is the key to your success.
Knowing when to pull Facebook spend because you can see if is underperforming and also knowing that you can move it across to spend on Instagram that is more effective by a factor of ‘X’.
Supercharge your customer acquisition with accurate measurement
Without a clear view of where your customers are coming from – and how much it’s costing you – creating a robust acquisition strategy that drives more customers to your site for less is unachievable.
That’s where accurate and effective attribution can help.
If you’re just getting started with retail and ecommerce attribution, download our guide below which covers everything you need to know, including:
- An introduction to marketing attribution
- The different types of attribution available
- A quick guide to attribution models
- Some key marketing attribution challenges