The fierce competition for the hearts of customers continues, with companies investing in everything from PR stunts to digital marketing. Yet, the leading challenge that business face in 2019? Customer Acquisition.
Here’s the deal: the cost of acquiring new customers has increased by over 50% in the last five years.
The same marketing tactics are becoming more expensive, yet failing to get results – at least, results that justify the costs.
If you’re heading into 2019 with a big question mark over your customer acquisition strategy, you’re not alone. Two of the most commonly cited marketing priorities for companies are:
reducing customer acquisition costs, and
proving ROI of marketing efforts.
Now for the good news. There is a way you can improve customer acquisition while lowering the cost of acquisition at the same time.
In this article, you’ll learn a whole host of tactics that you can add to your customer acquisition strategy to boost your ROI.
By the end, you’ll be able to build an acquisition strategy so robust, it’ll get you through 2019 and beyond.
Customer acquisition is the systematic process of bringing in new customers or clients to your business. But not just any customers.
Effective customer acquisition focuses on acquiring the right customers who will stick around to bring better lifetime value, and even help you acquire more.
The simplest way to explain the customer acquisition process is in terms of a conversion funnel. Before they convert, your customers go through these stages:
Gain awareness of your brand
Add your product or service to their consideration pool
Decide to buy your product/service
At each of these stages, your customers are using different marketing channels to help them move to the next stage. For instance, a customer might start by searching for a product on Google, then use blogs and ebooks to get more information, check out some product reviews, click on a sponsored post on Facebook, before finally making their decision.
The goal of your customer acquisition strategy is to make sure your brand is in the right places to push your customer down the funnel and through your checkout.
The most successful customer acquisition strategies are sustainable and agile. In other words, when new trends and changes come along, you don’t have to throw out the whole strategy and start again. Your customer acquisition strategy will scale and evolve to continually get the best results.
Before we get stuck into winning tactics for 2019, you need to understand your own customer acquisition cost (CAC).
CAC is the cost associated with acquiring the customer (no surprises there!). It includes any of the activities you’ve invested in to bring a new client to the business – marketing, events, advertising, and anything else.
Calculating the CAC is essential because it allows you to measure your return on investment and prove your customer acquisition success to your CEO, senior managers and even investors.
After all, proving your impact is just as important as making it. Even if a customer costs hundreds to convert, it’s all worth it if their lifetime value (LTV) or customer lifetime value (CLTV) is significantly higher.
There are two ways you can approach the customer acquisition cost:
Method 1: Basic Customer Acquisition Cost
Divide the marketing costs associated with a specific campaign or period by the number of customers acquired from the campaign. This is what the CAC formula looks like:
Customer Acquisition Cost (CAC) = Marketing Costs (MC) / Customers Acquired (CA)
This simple CAC formula is an effective way to compare different campaigns, as all other costs (e.g. wages) will likely remain consistent between campaigns.
Say you spent $50,000 on customer acquisition for Campaign A and acquired 1,000 customers, the CAC would be $50. Then you run Campaign B. You spend $24,000 and acquire 800 customers, meaning the CAC is $30 – significantly lower than Campaign A.
Method 2: Detailed Customer Acquisition Cost
For an accurate and actionable understanding of your CAC, you need to use all the costs associated with marketing – that means everything from advertising to marketing salaries, agency fees and printer ink.
Here’s what the detailed CAC formula looks like:
CAC = (MC + W + OS + S + OH) / CAC
CAC - customer acquisition cost, MC - marketing costs, W - wages for marketing and sales, OS – outsourced services, e.g. agency fees, S - marketing and sales software, OH - overheads for marketing and sales, CA - customers acquired
The detailed calculation should be used for a specific period, such as a month or quarter.
You might be surprised to find that some digital channels have a CAC higher than the average sale!
That’s why it’s so important to know exactly what is going on with your customer acquisition strategy and how to fine-tune it for success.
Next step: Evaluate your current customer acquisition landscape
Now you have your CAC calculation; it's time to delve deeper into your current situation to see how you can fine-tune your customer acquisition strategy.
Start by answering a few questions:
1. Which acquisition channels are working, and which aren’t?
Figure out the best growth mix for your business. Look at the different acquisition channels and analyse the results. This will help you decide what needs to stay, and what is a waste of good marketing budget.
2. Who are your most profitable customers?
Define and document who they are. Get specific – the more you know about your most profitable customers, the better you can tailor your customer acquisition strategy to find and convert them.
3. How else can you optimise your customer acquisition strategy?
Look beyond the marketing channels and into your operating costs. Are there any processes, resources or operations adding unnecessary fat to the process? What would happen if you started outsourcing some of the processes to deliver a stronger ROI?
PRO TIP: Put data at the foundation of your customer acquisition strategy.
Customer acquisition methods can be broken up into a variety of different types: paid and free, inbound and outbound, etc. So, how will you work out the best methods for your business and adapt your strategy to maximise results?
The most important thing you can do in your customer acquisition strategy is to ensure visibility. The easier it is to see what’s happening behind the channels, the better you can see what’s working and make decisions on how to move forward.
The bottom line?
Every decision you make around your customer acquisition strategy should be based on the numbers.
That means studying the data behind every channel that you use and testing different elements, such as landing page design, email subjects and Google Adwords copy.
Proper testing will help you uncover missed opportunities before they can hold back your customer acquisition process.
Without data, you’re embarking on a guessing game. A very expensive guessing game.
There are heaps of metrics you should be tracking. Here are just a few:
Average ranking position in SEO -
Cost per Click (CPC) for Google AdWords and other paid advertising
Click-through rate (CTR) for paid ads, emails, etc.
Cost per action
Impressions on Facebook, Instagram etc.
Number of email subscribers
Conversion rate from web visitors to email subscribers
Open rate for emails
Conversion rate from email subscribers to sales
Get the lowdown on ROI formulas you should be using for your online channels – we cover them in detail here.
If there’s one thing we’ve learned through hundreds of digital marketing growth campaigns, it’s that you should never put all your eggs in one basket. Use multiple channels to maximise the opportunities to acquire customers.
Your target customers will use more than one channel as they go through the conversion funnel, so a multi-channel customer acquisition model will give you the highest rate of return.
Next, we’re going to run through four commonly used channels for customer acquisition along with some proven tips to get the best ROI.
How do we know they work?
Because we’ve seen them deliver results for 1,000+ of our clients across Australia.
SEO is the way a website is indexed and ranked in search engine results pages (SERPs).
It’s a hugely cost-effective tactic for customer acquisition, but there’s one thing you need to remember about SEO: it’s all about the long game.
A lot is going on with SEO, but these are a few secrets to help your customer acquisition soar:
SEO Tip #1: Use Keyword Research to Get New Customers to Your Site
Identify those high-value search terms that your potential customers might be using.
Say you want to find out some keywords related to “long term insurance”. All you need to do is enter the search term into a keyword research tool like SEMRush to reveal what you need to know:
You can see the volume of organic searches for the keyword, phrase match keywords, related keywords, how the keyword is trending, and more.
What should you do with this information?
Use it to find new high-converting keywords for your web pages and content.
This is one of the most effective ways to get relevant traffic to your site and boost customer acquisition.
SEO Tip #2: Focus on long-tail keywords for natural language search
What’s natural language search?
Search Engine Watch explains:
“Natural language search is search carried out in everyday language, phrasing questions as you would ask them if you were talking to someone. These queries can be typed into a search engine, spoken aloud with voice search, or posed as a question to a digital assistant like Siri or Cortana.”
What does this mean for you?
The longer the keyword, the more specific it is. That means lower competition and fewer people searching for that keyword.
But…( and it’s a big “but”)
Those who are searching are more likely to convert.
Moz found that using natural language can yield higher search volumes for websites over time:
Think email marketing is an outdated customer acquisition marketing method?
You couldn’t be more wrong.
Email marketing generates the highest ROI out of common digital channels, earning an average of $38 for every dollar invested, according to a VentureBeat Insight study.
But there's another thing about email marketing that you might not realise — something that can really help your customer acquisition strategy.
Here it is:
Unlike social media, search, or content marketing, email marketing provides a direct line into your target’s inbox.
According to research by Litmus, email marketing commands more focus compared to social content, with brands able to achieve open rates of over 20% (compared to social media, where the percentage of users who see your content pre-boost on Facebook is around 1-3%).
Outside of direct sales, what other customer acquisition tactic offers this?
Email Tip #1: Send personalised product recommendations.
Send emails that recommend products based on the buying habits of past customers and you open the door to advanced cross-selling opportunities.
This boosts the relevancy of your emails, meaning recipients are more likely to open and click through.
Better still, it’s an easy way to increase average order value.
How do you know what to recommend?
For online retailers or e-commerce businesses, it’s easy:
Recommend items that were abandoned in the online shopping cart.
Source: Campaign Monitor
Or you can send offers based on what they have purchased previously.
Here’s a great customer acquisition example of an email from Catch.com.au
Email Tip #2: Send a re-engagement email campaign
Got email subscribers on your list who haven’t opened or clicked on your emails in a while?
Of course you do. Every brand does.
A personalised re-engagement email campaign will let you reconnect with them and “wake the dead”.
Just head to your subscriber list in your email campaign software. Segment your list to find inactive subscribers.
It’s up to you which timeframe you use – we recommend finding those who haven’t opened your emails in the past 12 months.
Once you’ve identified your inactive subscribers, set up a re-engagement campaign that will reconfirm their interest. Include a promo code or discount to entice them to act.
It’s important to include the opportunity to opt-out of future emails from you. That way, you’re keeping your email subscriber list healthy and active.
This re-engagement email by Urban Outfitters taps into humour and emotion – which stands out and is brand-appropriate:
When we talk about paid advertising for customer acquisition, it could be any of the following tactics:
Paid search marketing, i.e. advertising on search engines. Think Google Adwords, Google Product Listings etc.
Social media advertising, e.g. Facebook advertising, sponsored posts etc
Advertising on other sites, e.g. banner ads
So, which platform do you choose to get the best customer acquisition results?
Here are some stats from research by Criteo:
Paid display ads took out the top spot for marketing budget allocation last year, making up 17.6%, followed by social media at 16.5%.
More than 6 in 10 marketers who have targeted customer acquisition campaigns are using social media marketing.
Marketers see social media marketing and SEO as the top two most effective marketing activities in acquiring new customers.
At the end of the day, it depends what works for your target audience at each stage of the funnel. That means you need to go back to your data.
For example, social media marketing and paid display advertising are used by more than half of marketers at the conversion stage. Then, paid display advertising, social media marketing and email marketing are used to drive repeat purchases.
Once you’ve worked out the best performing channels for your customer acquisition strategy, focus on how to squeeze the most out of paid ads to drive customer acquisition.
Here are some proven tips:
Paid Advertising Tip #1: Know your audience
The better you can understand your audience, the lower your CAC. Simple as that.
For social ads and sponsored posts, this means really digging deep into your audience insights to find out everything you can.
Who are they? What are their behaviours? What are they interested in? What are their desires and challenges?
Once you know who they are, focus on making your ads as engaging as possible.
Social is centred around engagement, and probably always will be. Find out how to make your paid ads engaging, and you will drive a lower CAC than ever.
Paid Advertising Tip #2: Narrow your target audience
To reduce your CAC on social media ads, narrow down your target audience as much as possible.
If you’re a local business, that might mean narrowing to a specific geolocation.
Targeting users outside of your service area is a massive waste of ad budget and will increase your CAC.
Paid Advertising Tip #3: Create a custom landing page for every ad
Too many companies create Facebook ads and direct all of them to the same landing page.
Tailor each landing page to the specific ad. That way you will be able to adjust the message to the right audience and drive conversions.
Paid Advertising Tip #4: Combine Adwords Campaigns
Have you ever counted how many times you’ve seen a brand name before you pay attention to what they’re actually offering?
Research shows it takes at least 5-12 interactions before someone decides to purchase from you.
What does this mean for you?
Create more than one ad and use a number of different platforms to hit your customer acquisition goals.
Here's what this could look like for an e-commerce business:
Raise awareness with a Google AdWords campaign
Use Facebook sponsored post to make it relevant
Generate interest with a YouTube ad
Seal the deal with product listing ads
A content marketing strategy can include blogs, infographics, video, white papers, ebooks, and much more. The purpose is simple: to provide relevant, interesting and fresh information to your consumers so they will be compelled to buy from you.
Why should content marketing be part of any customer acquisition strategy?
Simple. Over 70% of consumers prefer information found in blogs to that found in ads.
The power of content marketing goes deeper still.
The success of almost all other customer acquisition tactics is tied to content marketing.
You can’t have great SEO without high-quality, relevant content. And don’t even think about what happens to social media engagement if you don’t have exciting content to grab the attention of users.
The bottom line?
Pay attention to your content marketing for customer acquisition success.
Content Marketing Tip #1: Use data to find out which content will convert best
Are some ebooks getting more downloads than others? Are some blog topics keeping readers engaged for longer than others?
There’s plenty of data out there which will show you exactly which content is engaging customers, so you know where to focus your efforts.
Use Google Analytics to see which content is getting more views and downloads. You can create custom goal reports in Google Analytics to see the metrics you need.
Once you know what’s working, create more material around these topics.
Content Marketing Tip #2: Speak to your sales team
Google Analytics will show you what is being read and downloaded, but it won’t tell you why.
That’s where your sales team comes in.
Ask your sales team why a prospect may be interested in particular types of content. After all, they talk to leads and customers every day.
Working together will reveal insights that you won’t find elsewhere. Plus, by showing them that you value their knowledge, you will build strong relationships.
Wondering what all this looks like in action? Here are some examples of companies who have successfully put these tactics to work:
Like most online companies, the Australian edible bouquet maker and e-commerce player was seeing the cost of customer acquisition rising. So, they looked at how they could better personalise email communications to customers. In the first six weeks of implementing personalised email campaigns, Edible Blooms saw a 600% ROI! Since then, they have achieved strong growth in click-throughs, engagement and traction.
The company also used re-engagement emails to target customers who had not visited the site for six months. The sequence of campaign emails featured a baby crying, with the crying getting worse as the emails continue. A brilliantly emotive and attention-grabbing campaign!
Another winning customer acquisition example comes in the form of custom interactive content by Shopify. The e-commerce platform launched a “Business Name Generator”, allowing potential new customers to brainstorm business name ideas and check to see if it is registered. The content is a highly relevant tool designed to add value for customers and generate leads.
Customer acquisition is the #1 revenue generator for any company. Any time spent fine-tuning a customer acquisition strategy to take advantage of proven channels is time well-spent.
Start by taking stock of your current situation:
Calculate your customer acquisition costs
Dig deep into data behind each channel
Use new insights to set up your customer acquisition strategy for success
You’ll not only lower your customer acquisition cost but also achieve sustainable growth in 2019 and beyond.
If you don’t have the time or resources to look at what’s going on behind the scenes, or you simply want an expert perspective, claim your free Digital Audit today.
Our Gurus can perform a comprehensive audit of your digital marketing and give you the insights and recommendation to make data-driven decisions and drive a lower CAC.