In the past few years, the cost to acquire new customers has risen by about 60%. Marketing is more expensive, customers aren’t as trustworthy as modern brands, and sometimes it makes you feel like you should give up. Don’t give up (as tempting as it may be).
Instead, you need to get smart and find ways to build and improve your customer acquisition strategy. Also, you must optimize your customer acquisition process by understanding industry trends to ensure you achieve the desired results.
What Is the Customer Acquisition Funnel?
It is the framework that helps you track and monitor the effectiveness of your efforts to attract and retain customers. It also provides insight and guidelines on steps you can take to keep improving your results.
The Importance of a Customer Acquisition Strategy
You may think that the customer acquisition process is simple, and you don’t have to take the time or put in the effort to create this funnel. However, this couldn’t be further from the truth.
Developing an effective funnel will help you attract, engage, retain, and convert customers with little cost and effort. It will also help you determine your target audience and what customer acquisition channel works best for your business.
When you map out or visualize your customer’s journey, you learn more about the actions they take and what is happening in their minds. You can also poll the new and existing customers to see what they liked or disliked about the process. Doing this may help you reduce customer churn and improve your lead generation efforts.
With this information, you better understand when they may be willing to purchase the service or product you offer. There are a few stages in any buying process.
These stages include:
- Recognizing wants and needs
- Searching for resources and information
- Evaluating and comparing options
- Evaluating the item after buying it
What this means is your leads go through a process of figuring out what they want or need, but being unsure where to buy it.
This results in the research stage where your target audience determines if they trust your brand enough to purchase from you. The last step is that the customer will consider the cost of the item before buying.
A strong customer acquisition process will help you avoid losing prospects as they make their way through these crucial stages. The same is true for when leads move from your marketing team to the sales team, to the customer service team, etc. With an effective funnel, you are much less likely to have miscommunications or missing data.
Now it is time to learn how to improve your customer acquisition efforts. The right customer acquisition strategies will go a long way in helping ensure your customers find what they want and have a positive experience along the way.
Essential Elements of an Effective Customer Acquisition Strategy
Creating a customer acquisition strategy and focusing on the right customer acquisition channel for conversions is a highly personal process and something each brand must figure out for itself. While this is true, there are some core elements you should keep in mind.
Integrating Your Business Goals and Strategy
You need to figure out what success looks like for you. Success for your business includes defining your target audience. You also need to determine the metrics you will use to measure success. Establishing this from the start is a must and will help you with your goal to acquire customers.
When creating a campaign or business goal, you need to consider your marketing efforts’ historical impact on business growth and look at basic industry benchmarks.
Considering customer churn is also necessary. When churn is high with new or existing customers, your customer acquisition campaign needs to make up for the losses you occur effectively. The new customers acquired should make up for what you lose. If this doesn’t happen, achieving growth is virtually impossible. Having an effective lead generation and customer retention strategy in place will help to eliminate some of the pressure of this. It also helps you create more attainable and reasonable goals related to being able to acquire customers.
Determine the Best Acquisition Channels for Your Business
You can deploy customer acquisition strategies on several fronts. Some include traditional advertising, SEO optimization, digital advertising, affiliate marketing, and content marketing.
The only way to figure out what channels provide you with value and the newest customers is by testing several of them. You must also measure things like customer acquisition cost (CAC), relative performance, and other vital factors.
Understanding Customer Acquisition Costs
CAC (customer acquisition cost) is determined by taking the amount you spend to acquire a new customer and dividing it by the total number of clients you earned.
One example will be if you invest $1,000 in social media marketing. If it resulted in 100 conversions, the customer acquisition cost for this was $10 per conversion.
No set customer acquisition cost is perfect across every industry. While this is true, a good baseline is determined by figuring the customer acquisition cost and comparing it to the customer’s LTV (customer lifetime value).
According to experts, the best CAC to LTV ratio is 1:3. The ratio means that if the customer lifetime value is $30, a reasonable customer acquisition cost is $10. Also, the lower the customer acquisition cost is, the higher your profit margins.
Now that you have a foundation in place to generate new customers, it’s time to learn about the parts of the customer acquisition technique and how to create evergreen customer acquisition strategies. These tools will help you to continue generating interest from new customers.
Customer Acquisition Strategies: Building Your Funnel
Just like a traditional funnel, the one for customer acquisition starts broad and narrows as you move down it. You can look at it as if you cast a large net to capture as much interest and attention to begin with and then narrow things down as quality leads separate from those who aren’t interested in what you offer.
Starting from the stop and moving down, the stages of an effective customer acquisition strategy include:
New audiences and prospects are first aware of your brand and what you offer. Awareness is the first step in any customer acquisition process. This is done through independent research conducted by the individual or your brand’s marketing and sales efforts.
Next, your brand takes steps to set yourself apart or educate customers about what you offer. Finding ways to appeal to your customer’s emotions is highly effective at this stage. The best way t is by creating a resonant or clever message. You should also consider using customer stories. The more interesting a prospect finds what you offer, the lower your customer acquisition cost will be.
Also, by engaging existing customers in the acquisition business model, you can increase customer lifetime value LTV, because the customer feels like they are part of the team.
A prospect will visit your website, download the content, and may sign-up for a free trial. At this point, the prospect becomes more familiar and comfortable (hopefully) with your brand and what you offer. In customer acquisition, it’s your job to make what you offer appealing. Appealing to prospects is how you turn interested customers into paying customers.
As prospects (at this point, your target audience) move further down the sales funnel, they get closer to making a buying decision. Usually, this includes adding items to their shopping cart and watching product demonstrations. In customer acquisition, this means you are one step closer to a sale.
It is up to you to continue engaging your customers in response to their activity. In fact, it’s a big part of customer acquisition. Next, prospects will begin to weigh the costs and benefits of actually making a purchase. They may also consider similar products or brands or do nothing.
Leads or prospects become paying customers if they complete a transaction. After the sale, you can look for new opportunities to upsell, cross-sell, and reward your loyal customers.
Tips for Creating an Effective Customer Acquisition Strategy and Funnel
Before you can start optimizing your sales funnel, you have to have a strategy to acquire new customers. Today, you have more than a few options. While paid advertising, social media platforms, and content are essential, don’t forget about things like direct mail and using market research to improve your conversion funnel. Setting the right priorities will help you spend your marketing dollars wisely.
Start with the Right Questions
During market research and the planning process for customer acquisition, you should answer the following questions:
- Who is your target persona or ideal customer?
- What business goals do you have (i.e., revenue growth,
- conversions, leads, brand awareness, etc.)?
- What channels will you use for demand generation marketing?
- How are you going to measure campaign success?
Your planning will be most effective if you involve several teams in this process, including sales, leadership, product development, marketing, and others.
Optimize Content for Organic Search
Ensuring your website is easily found online is an essential part of any successful customer acquisition strategy. To do this, make sure you refresh your old content (updated info and new links) and republish it. Doing this can help impact its ranking and increase web traffic. When you offer quality and valuable content and post it regularly, you will convert visitors more successfully and find that retaining customers is easier.
Figure out what content you have published is getting the most clicks and why this is the case. For example, are there location-, feature-, or industry-specific queries that lead people to your website or page?
Prioritize Social Engagement and Advertising
Part of effective customer acquisition strategies is social advertising. This provides a relatively low cost but unparalleled opportunity. Utilizing this can help you engage prospects, build a community around your brand, and increase brand awareness.
Social media users are typically receptive to campaigns and ads. Also, as a marketer, you can target your audience and track performance with even the smallest details.
Utilize Multiple Channels
Posting ads on several channels can benefit your customer acquisition strategy in many ways. For example, it ensures that a single, underperforming channel or ad does not negatively impact your entire customer acquisition strategy. It also provides better results for most campaigns.
Put Money into Your Creative Assets
Customer acquisition strategies will only be as effective as the creative assets you use. This is true even if it is planned carefully. It’s worth noting that videos and images aren’t enough, on their own, to break through the clutter. They will also drain your resources – quickly. This is especially true for images that don’t reflect well on your brand.
In the last few years, investing in high-quality creative has become more important than ever if you want to encourage new customer acquisition.
Use Video When Possible
Over 80% of businesses use video marketing efforts to attract, inform, and entertain prospects and customers. You can use videos to help tell customer and brand stories. They also help educate viewers by showing what you offer in action and demonstrating how they are used.
The right videos can create an emotional response and are more likely to go viral. Make sure videos are a central element of your customer acquisition strategy.
Optimize Your Ads
If you want to be successful when it comes to social advertising, it means you must fine-tune and refresh your ad creative using quantitative creative testing. Testing requires you to change out different elements of effective concepts and test how effective they are.
Some of the elements you can change on these ads include:
- Video length
- Ad copy
It is a cost-effective strategy to create variations of your successful ads. Try making this about 80% of your ad spend and the other 20% for developing completely new concepts.
Use the Power of Paid Ads
There’s no question that paid advertising is a booming business. Paid social media and search ads are powerful traffic drivers. They are also a lower-cost way to acquire new customers. Based on your priorities and marketing budget, you can choose if you want to pay per impression or pay per click.
Build Partnerships with Other Brands
Co-branding is something that can help you achieve success, too. You can pool your resources with other companies, leverage each other’s influence and current customer base, and begin filling your sales funnel. Partnering with other brands is done by making customer acquisition a joint effort.
Create a Referral Program
Another way to get more prospects into your acquisition funnel is by creating a referral program. Ask your current customers to refer friends and family members. You can offer perks, such as discounts, when they do this. Believe it or not, this tactic is relatively low-cost.
Remain Transparent and Helpful
Make sure your product information and brand messaging remain straightforward to understand. You need to create calls to action that provide a clear path and evident benefit. When possible, including testimonials, product ratings, and media mentions.
Focus on Flexibility and Sustainability
Use your resources to execute and make changes to your customer acquisition strategies and campaigns. You should also put a digital content strategy in place to ensure your inbound marketing efforts are supported. You also have to be flexible and ready to change gears based on customer expectations and marketing conditions.
Tips for Maximizing Your Acquisition Funnel
Just because you have a customer acquisition strategy in place and leads are entering your funnel, it doesn’t mean your work is done. You must continually optimize your funnel efforts to continue improving them. It doesn’t matter how big or successful your business is.
Eventually, you will have blockage points in the sales funnel you created. It’s at this point where your conversion rates may drop – often significantly. In fact, you may also deal with a scaling problem (for example, you can’t increase the number of people moving out of that part of the funnel to the next because your sales or marketing techniques have been maxed out).
If you find a way to solve the blockage point, another one will likely pop up somewhere else in the funnel. Unfortunately, blockage points occur all the time. It’s up to you to identify them and fix what has caused them.
How to Identify a Sales Funnel Blockage Point
One of the simplest ways to identify a blockage point is by asking this question:
What has stopped you from being able to create your sales by five times?
Some of the most common answers include:
- You don’t have enough leads entering the top of your funnel.
- You have a lot of website visitors, but not enough converting to a registered user.
- Signing up customers is going well, but there’s not enough growth in the account after one sale.
- You can’t get meetings with the essential decision-makers.
- You have people signing up for your freemium product, but not enough becoming a paid user.
No matter the cause of the blockage, it’s up to you to figure out how to fix it.
Common Blockage Point Causes
Now it’s time to learn about the most common blockage points that may occur.
The Market or Product Fit
If you have a startup company and have just entered the market, one of the main issues with acquisition funnels is that you haven’t found the right market or product fit. You have to figure out if this is the problem. The wrong diagnosis can lead your management team to waste money and time on marketing and sales that aren’t a good fit and don’t produce the desired results.
The right way to handle this is by focusing all your attention and energy on solving the market or product fit. While doing this, limit how much you spend on marketing and sales to the minimum amount required to ensure good customer interactions and see where your customer has the highest levels of urgency and pain you can offer a solution to.
At this point, it’s important to conserve your cash and continue paying for product development to create a product that fits the current market need.
Beyond the Product or Market Fit
Another common blockage is that you hope your customers will do something they haven’t been motivated to do.
For example, you hope that people visit your site in droves. However, you didn’t take the right steps to ensure they were aware of your site. Not only that, but you haven’t provided a source of motivation or a reason that they would want to visit in the first place.
Take some time to review your website. You may discover its way to sales-oriented and doesn’t provide any value to someone who may be interested in buying what you offer.
Another issue is if you want prospects to fill out an online registration form and provide contact information but haven’t provided assurance you won’t spam your new registrars down the road.
Usually, this occurs because businesses create a customer acquisition strategy based on their view of things rather than understanding the customer’s buying process and their concerns at every stage.
Solving Common Blockage Points in Your Acquisition Funnel
After figuring out what your blockage points are in customer acquisition, you need to start solving them. An effective way is by getting into your customer’s heads and knowing the concerns they have at different stages of your sales process.
Some of the most common customer concerns include:
- It is long and daunting to switch
- They don’t have time
- They don’t want to get spam emails
- They have other things to think about
- They currently have a product that takes care of what you offer
Each of the concerns above represents a source of friction in your sales process. If you can map these out clearly and write them down, it will give you the information needed for taking the next step, which includes studying different things that may motivate them to take action or the next step in the process.
Look at the concerns as the friction in the process. The motivations are the pulling forces you can use to overcome these sources of friction.
The key is finding the right source of motivation to overcome the concerns your prospects have. The motivation has to be powerful enough to get clients to continue moving forward in your sales process. At this point, bringing in your most creative thinkers to come up with solutions is a must.
Because customers have an aversion to being sold all the time and want control over the buying process, you can’t use old methods to move them through your sales funnel. You have to think creatively and outside the box to achieve the results you want.
Issue: Getting New Traffic to Your Website
A common blockage point for many businesses is found at the top of the funnel – getting found online. If you can’t even get a dialog started with your potential customer, you won’t ever have a chance to sell to them.
A common misconception for some entrepreneurs is that people will come to it automatically if you build a website. With all the pressure of today’s always-on lifestyle, most buyers experience serious information overload. The most valuable commodity they have (that you want) is their attention and time. You won’t get their attention if you just build a website and hope it will spread and go viral – today, this simply isn’t reality.
Now is the time to get to know some of your client’s concerns and motivations.
Want to avoid wasting time on something that’s not relevant or valuable immediately.
- Don’t want to be sold to.
- If your site doesn’t appear on the first page of Google
- search, most people don’t look any further.
- Worry about if the best service or product has been found.
- Concern of if this is the best deal.
While there are some concerns that most potential buyers will have, if they are searching for something, there is a source of motivation, too. Some sources of motivation include:
- They have a problem and want a solution.
- Friends have recommended a product, and they want to check it out too.
- If something is offered free, and it is valuable, then it is something they want.
- They want to learn more about something, even if it is unrelated to what you offer.
- They trust the consulting firm, individual, or review site is an expert and wants to know what they say about the product or service.
- They like sites that educate and entertain them on topics they are passionate about
If you want to get people to pay attention to you, you need to think about giving them something valuable, which will help you earn their attention.
Issue: Getting Customers to Sign-Up or Register
Another common issue with today’s conversion funnels occurs when you want visitors to register or sign up for something.
Again, start by looking at their concerns and motivations.
Some of the potential concerns in this area include:
- Customers don’t want to give out their email addresses because they fear spam emails.
- Some distrust businesses and vendors with their email.
- The information is personal, and it takes time to look at emails.
- You want customers to put time and effort into trying a product.
- They have a problem and want a solution.
- The site has enough positive feedback that the product is worth their time.
- They care about finding the best options in the industry.
- They want to impress others with their purchase.
- They are passionate about something and want to learn more.
Some good marketers discuss the time to the “wow!” moment. Be sure to discuss how long it takes for a customer to get to the “wow!” point.
With the conventional approach to get someone to sign up or register, they have to complete this step before they experience the “wow!” moment and get some gratification.
If this is your strategy, it may be time to try a different strategy. A good strategy is to ensure they experience the “wow!” moment before asking them for anything.
What is the customer acquisition funnel?
The customer acquisition funnel is the construct that helps your sales and marketing teams understand the progress they have made to acquire a new customer. It also works to measure how effective your overall strategy is.
The closer a customer is to the bottom of your funnel, the more likely they are to purchase the service or product you offer.
What are acquisition funnels?
An acquisition funnel is a place or process where you turn your prospects into actual customers. Some more prominent companies (and smaller ones, too) deal with blockage or leakage points in their funnel (described above).
However, after fixing these, they experience significant boosts in revenue and growth.
What are the components of the customer acquisition funnel?
Every stage of the funnel will push the most qualified leads to the next stage, and then those who aren’t interested in what you offer will drop out. The sales funnel you have directly connects to your customer journey phases, which are sorted into three parts – top, middle, and bottom.
What is the customer acquisition process?
The customer acquisition process means bringing new customers to buy from you or convincing people to purchase what you offer. The process involves encouraging consumers to move down your marketing funnel by building brand awareness and helping them make a purchase decision. You will use combined efforts to make this happen, including social media marketing, customer acquisition funnels, referral program leads, and other lead generation techniques.