Customer Acquisition: Definition, Formula, and Strategy
aroundknowledge.co.id – Customer Acquisition – Paying customers is the lifeblood of any business, regardless of your industry, niche or occupation. Every business owner and manager cares for their customers, but not everyone sees them through the lens of a solid customer acquisition strategy.
Implementing a customer acquisition process can turn revenue into a more predictable and repeatable process rather than a random occurrence.
You will also gain a better understanding of how everything relates to your finances, incl the average revenue each customer generates and how much it costs to earn it and earn their loyalty.
If you want to build a customer acquisition plan, you've come to the right place. In this article, we'll look at what it is, how to calculate it, and how you can get started on your customer acquisition strategy today.
What is Customer Acquisition?
Literally, customer acquisition is the process of turning prospects into paying customers. But in reality, there is much more to your customer acquisition strategy.
It is a measurable and iterative marketing process that grabs the attention of potential customers and move them through the buying cycle, turning them into long-term paying customers long.
The customer acquisition process is often divided into three phases.
- Awareness. Prospects find your brand and show interest.
- Consideration. Prospects become prospects when they start their research and consider buying.
- Conversion. Leads are converted into paying customers. From now on, brands can shift their marketing efforts towards long-term customer retention or loyalty.
A successful customer acquisition strategy considers all of these steps, employs tailored marketing practices, and orchestrates the user experience every step of the way.
Customer Acquisition Cost Calculation
Every business needs to understand how to calculate customer acquisition costs (CAC). This is how you will know if your marketing approach is profitable or not. To determine your CAC, divide your total marketing costs by the number of new customers you acquire.
Customer Acquisition Cost Formula: Total Marketing Cost / Total New Customers
Let's say your LinkedIn page attracts 15 subscribers per month and spends $100. 3 million for content development. Your CAC is Rp. 3 million / 15 = Rp. 210 thousand per customer. After calculating the CAC, you can use it to calculate the profit for each order.
For example, if your customers spend an average of Rp. 1 million when they buy from your business, and you maintain 50% margin on each order, your profit will be:
Rp. 1 million (Average Order Amount) x 50% (Gross Margin) – Rp. 210 thousand (CAC) = Rp. 300 thousand (Profit)
You can use a tracking/reporting tool like Shopify Reports to find out your customer acquisition costs for different marketing initiatives.
6 Must-Try Customer Acquisition Strategies
Are you ready to start your customer acquisition efforts? Let's take a look at some of the best tested technologies used by brands around the world.
1. E-mail
Email marketing is one of the most profitable forms of marketing. According to Statista data, brands in the retail, e-commerce and consumer goods industries generate top returns investment (ROI) of Rp. 675 thousand for every Rp. 15 thousands spent on marketing e-mail.
First you need to build an email list. We may do so through pop-ups and newsletter sign-up forms on our website, as well as events such as contests and sweepstakes through our website and social media.
Once you've built your list, there are many ways to use email to build a relationship with your prospects, including:
- Bulletin. Keep your customers in the loop about what's going on in your business. Discuss news, new product launches, and get creative with “behind the scenes” content such as how the product is made and who the team is.
- Promotion. Are there any sales or events coming up? Generate interest via email.
- Transaction. Use registration and purchase confirmations as an opportunity to sell, sell, and sell more products.
2. Content Marketing
You probably 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.
You need a solid content marketing plan to catch people's attention, engage them, and convince them to jump in and buy. A content marketing plan can include:
- Blogs. Write useful and interesting articles about your industry, products and topics related to your products. For example, a beauty brand might blog about skincare tips and give makeup tutorials.
- Social media. Create posts, videos and interactive content related to your brand. For example replying to all comments and commenting on other posts to make them stand out.
- Other formats such as podcasts, print publications, applications, press releases, etc.
Beauty brand Beauty Pie blogs about everything from customer highlights to skin care to myth-busting research in the beauty world.
3. Influencer Sponsors
Influencer marketing is a huge industry, especially on social media apps like Instagram, Facebook and TikTok. Through this customer acquisition channel, brands work with influencers to promote their products or services.
By definition, an influencer is an online personality or entity with a loyal and dedicated following. If you find the right people to partner with influencers who are in your niche and relevant to your brand, you can build hundreds or even thousands of potential customers.
You can get influencers to create content about your brand or product in exchange for paid or free items. Influencers can also try affiliate marketing to reduce sales. Beware of traps. ROI can be difficult to track and requires up-front investment.
4. Traditional Advertising
Advertising is not dead. You can continue to leverage customer acquisition channels such as print ads, TV ads, billboards and direct mail. Of course, this depends on the type of business you have and the potential ROI from using less scalable, more geo-targeted technologies.
For example, you can't track impressions, views, and engagement with real ads the way you can with digital marketing technologies.
However, you can use omnichannel marketing to bring it all together. For example, print ads that direct customers to your website, app or digital funnel.
5. Build an Audience
Social media platforms such as YouTube, Instagram and Twitch have made it possible for ecommerce brands to build a large online following of potential customers. A real world example is Gymshark.
Gymshark has over 6 million followers on Instagram and has cultivated a community of brand ambassadors who support the brand everywhere.
This not only gives brand authority, but creates a customer base that Gymshark can reach whenever it wants to increase sales or promote a new item.
Most lead-building strategies take time, effort, and consistency, but they often do found it useful because it can help you create a customer group that you can reach for free anytime.
6. Paid Ads
Paid advertising has emerged as a popular way for ecommerce brands to attract new customers.
This type of advertising offers several advantages that can help your business grow quickly, including pushing brand exposure and provide targeting capabilities that allow you to tailor your products based on interests and behavior person.
It's no surprise, then, that many e-commerce companies use it as part of their customer acquisition efforts. For example, makeup brand Glossier uses Facebook ads to find new customers online.
Facebook and Google reign as the most prominent paid advertising platforms, but there are other options to consider. Choosing which site to use depends on understanding your potential customers and where they spend their time online.
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