The Complete Guide to the Customer Acquisition Funnel

In the past few years, the cost of acquiring 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.

In navigating these challenges, one key framework has emerged as a guiding light for businesses seeking to enhance their customer outreach—the customer acquisition funnel.

As the marketing terrain evolves, optimizing the customer acquisition process becomes imperative. By understanding industry trends and aligning strategies with the stages of the funnel, businesses can navigate the complexities of modern marketing and secure the desired results.

In this article, we will discuss the intricacies of the customer acquisition funnel and explore strategies to fortify your customer outreach efforts.

What Is the Customer Acquisition Funnel?

The customer acquisition funnel is a conceptual framework that illustrates the stages a potential customer goes through from awareness of a product or service to becoming a paying customer.

The Importance of a Customer Acquisition Strategy

You may think the customer acquisition process is simple and you don’t have to take the time or 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 the best customer acquisition channel for your business.

When you map out or visualize your customer’s journey, you learn more about their actions 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. 

With this information, you better understand when they may be willing to purchase your service or product. 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
• Buying
• Evaluating the item after buying it

This means your leads go through a process of figuring out what they want or need but are unsure where to buy it.

This results in the brand 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. Effective full-funnel marketing results in fewer 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 customer.

Essential Elements of an Effective Customer Acquisition Strategy

Creating a customer acquisition strategy and focusing on the right channel for conversions is a highly personal process that each brand must figure out.

Here are some statistical evidence highlighting the success rates of different customer acquisition channels:

1. Email Marketing: Email marketing boasts an average return on investment (ROI) of 122%, surpassing other marketing formats such as social media, direct mail, and paid search, which exhibit only a quarter of this profitability.
2. Social Media: In comparison to outbound marketing, social media demonstrates a lead-to-close rate that is twice as high. Furthermore, 84% of B2B marketers employ social media in various capacities.
3. SEO: A majority of marketers, constituting 70%, consider SEO to be more impactful than PPC. Using Google’s advertising solutions has proven advantageous for over 1.3 million businesses, website publishers, and nonprofits nationwide.
4. Content Marketing: Content marketing generates three times as many leads as paid search advertising. In the U.S., 61% of online consumers make purchasing decisions based on recommendations they read on blogs.
5. Referral Marketing: Referral marketing boasts a conversion rate four times higher than the average observed in other customer acquisition channels. Marketers leveraging referrals experience acquiring more customers, with 43% reporting such success.
6. Omni-Channel Strategy: Nearly half of consumers, accounting for 49%, make weekly purchases from their preferred omni-channel brands.

Remember, the success of these channels can vary based on various factors like the target audience, industry, product or service type, and the overall marketing strategy.

While this is true, you should keep some core elements 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 of acquiring customers.

When creating a campaign or business goal, you need to consider the historical impact of your marketing efforts 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 must compensate for the losses you incur effectively. The new customers acquired should make up for what you lose. If this doesn’t happen, achieving growth is virtually impossible. An effective lead generation and customer retention strategy will help eliminate some of this pressure. It also helps you create more attainable and reasonable goals for acquiring 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, conversational advertising, and

The only way to determine what channels provide you with value and the newest customers is by testing several of them. You must also measure customer acquisition cost (CAC), relative performance, and other vital factors.

Understanding Customer Acquisition Costs

The average customer acquisition cost (CAC) for e-commerce businesses is $70, while for Software as a Service (SaaS) companies, the average CAC falls within the range of $200 to $350.

CAC is determined by taking the amount you spend to acquire a new customer or user and dividing it by the total number of clients you earn.

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. 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

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 as possible and then narrow things down as quality leads separate from those not interested in what you offer.

Starting from the stop and moving down, the stages of an effective customer acquisition strategy include:

Awareness

New audiences and prospects are first aware of your brand and what you offer. Awareness is the first step in any customer and user acquisition process. This is done through independent research by an individual or your brand’s marketing and sales efforts.

Practical strategies you can implement:

• Develop and share valuable, educational content through blog posts, articles, and infographics. Focus on addressing your target audience’s pain points, questions, and interests. This positions your brand as an authority in the industry, attracting attention and fostering trust.
• Leverage the power of social media platforms to engage with your audience. Share visually appealing and shareable content, participate in conversations, and actively respond to comments. Invest in targeted social media advertising to reach a broader yet specific audience, increasing brand visibility among potential customers.
• Optimize your online content for search engines to ensure your brand appears in relevant search results. This includes using relevant keywords, creating meta descriptions, and improving website loading speed.
• Partner with influencers or thought leaders in your industry to extend your brand’s reach. Influencers often have dedicated followers who trust their recommendations, making this a powerful strategy for increasing brand awareness. Ensure the influencers align with your brand values and target audience for maximum impact.
• Build an email subscriber list and implement targeted email campaigns. Share newsletters, exclusive offers, or valuable content directly with your audience.

Interest

Next, your brand sets itself apart or educates customers about your offer. Finding ways to appeal to your customer’s emotions is highly effective at this stage. Creating a resonant or clever message is the best way to do this. You should also consider using customer stories. The more attractive a prospect finds what you offer, the lower your customer acquisition cost.

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.

Consideration

A prospect will visit your website, download the content, and 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 your offer appealing. Appealing to prospects is how you turn interested customers into paying customers.

Practical strategies you can implement:

• Provide in-depth information about your products or services, highlighting key features and benefits. Consider creating comparison guides that showcase how your offerings stack up against competitors.
• Showcase positive experiences from existing customers through testimonials and reviews. Consider creating a dedicated section on your website or utilizing third-party review platforms.
• Engage your audience with interactive content, such as product demos, webinars, or interactive tools that allow them to experience your offerings firsthand.
• Implement targeted remarketing campaigns to re-engage users who have shown interest but haven’t made a purchase. Utilize personalized ads, exclusive offers, or reminders to encourage them to revisit your website and move further down the funnel.
• Develop targeted email drip campaigns that deliver relevant content to potential customers based on their interactions with your brand. Provide additional information, case studies, or exclusive offers to nurture leads and guide them toward making decisions.

Intent

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, you are one step closer to a sale.

Evaluation

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 purchasing. They may also consider similar products or brands or do nothing.

Practical strategies you can implement:

• Offer free trials or product demos to allow potential customers to experience your product firsthand.
• Develop detailed case studies that showcase real-world examples of how your product or service has addressed specific challenges and delivered positive outcomes for existing clients.
• Provide personalized consultations or demonstrations for potential customers who are actively evaluating your product. Tailor these SDR sessions to address their specific needs and concerns, offering a more customized approach that can significantly impact their decision to move forward.
• Create comparison tools or resources that enable potential customers to compare your product with competitors directly.

Purchase

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.

Practical strategies you can implement:

• Simplify the purchasing process on your website to minimize friction and enhance user experience. Implement a user-friendly and intuitive checkout system with clear calls-to-action, straightforward forms, and multiple payment options.
• Create a sense of urgency and incentivize purchases by introducing limited-time offers, discounts, or exclusive promotions.
• Capitalize on the purchase stage by presenting relevant upsell or cross-sell opportunities. Recommend complementary products or upgrades that align with the customer’s initial purchase.
• Implement a post-purchase communication strategy to show appreciation for the customer’s decision and provide additional support. Send thank-you emails, offer assistance with product setup or usage, and encourage customers to leave reviews or feedback.

Tips for Creating an Effective Customer Acquisition Strategy and Funnel

Before you can start optimizing your sales funnel management, 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 direct mail, franchise advertising, 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 essential to any successful customer acquisition strategy. To do this, 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? Organic traffic has great benefits you’ll do well if you take advantage of.

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 in encouraging new customer acquisition.

Use Video When Possible

Over 80% of businesses use video marketing 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 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 in social advertising, you must fine-tune and refresh your ad creative using quantitative creative testing. Testing requires you to change out different elements of practical concepts and test their effectiveness.

Some of the elements you can change on these ads include:

• Video length: Research indicates that videos of shorter duration tend to be more successful in capturing consumer attention and fostering engagement. Nevertheless, the ideal video length can vary based on the platform and the nature of the content being promoted.
• Ad copy: The performance of advertisements is heavily influenced by the effectiveness of ad copy. As outlined in a study, skillfully composed ad copy can substantially elevate social media engagement.
• Images: The choice of images in an advertisement can significantly impact consumer response. Specifically, advertisements incorporating human faces were observed to elicit more robust emotional reactions and improved memory recall compared to those without such images.
• CTAs: Well-defined and persuasive CTAs are crucial in substantially improving user engagement. An investigation demonstrated that the inclusion and nature of CTAs in children’s advertising also notably impacted parental assessments.
• Colors: Colors featured in an advertisement can influence consumer reactions. Advertisements displaying visually similar colors were noted to be more memorable compared to those utilizing contrasting color schemes.

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

Without question, 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.  At this point, 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 increase 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 registered users.
• 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.
• People are signing up for your freemium product, but not enough paid users.

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 marketing 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 knew about 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 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 concerns at every stage.

Solving Common Blockage Points in Your Acquisition Funnel

After figuring out your blockage points in customer acquisition, you need to start solving them. An effective way is by getting into your customers’ heads and knowing their concerns 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 concern 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 your prospects’ concerns. 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 develop solutions is necessary.

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 must think creatively and outside the box to achieve your desired results.

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 start a dialog with your potential customers, 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.

Potential Concerns

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 whether this is the best deal.

Common Motivations

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 for free and it is valuable, then it is something they want.
• They want to learn more about something, even if it is unrelated to your offer.
• They trust the marketing consulting firm, individual, or review site is an expert and want 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 that will help you earn their attention.

Issue: Getting Customers to Sign-Up or Register

Another common issue with today’s Saas sales funnels, or conversion funnels, occurs when you want visitors to register or sign up for something.

Again, start by looking at their concerns and motivations.

Potential Concerns

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.

Common Motivations

• 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!” micro-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 must 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.

FAQs