Customer acquisition is the most important and most challenging part of growing a business. There is nothing more critical than mastering customer acquisition. One of the reasons it’s very challenging is that there isn’t one way to do it and it’s effectiveness greatly depends on the nature of the business. Every business is different. Here is what makes every business different. For starters, you have
- Business model
- Products / Services
- Monetisation strategy
- Organisation size
- Target demographics
- Competitive landscape
- Available financial resources
- Level of brand awareness
- Internal customer acquisition capabilities
All the above factors affect and contribute to what makes a certain customer acquisition strategy effective.
I present you this case to make one point across – it’s never a one size fits all. Customer acquisition needs to be super personalised and tailored for it to be effective.
In saying that, this guide is going to cover all the principles you need to know to build an effective customer acquisition strategy and outgrow your competitors.
Here’s what we’ll cover.
- What customer acquisition is
- Customer acquisition in the digital marketing space
- What KPIs to measure for effective customer acquisition
- Understanding your customer
- How to understand what’s valuable for your customers
- Build your brand reputation and leverage trust to get more sales
- Create a true competitive advantage
- Use effective lead generation and sales conversion strategy
- More Product ore more Marketing?
P.s This guide is not about sales skills. It’s 100% about everything else that is in my opinion the 90% of the process of customer acquisition.
With a much more educated consumer and customer today, selling is less effective and cheap than it once was. Apologies to all the sales folks out there. And there are certain sectors where Sales is extremely important for a lot of industries, marketing is where most of the work is done. If someone wants to buy what you sell, you’re 99% there. And that’s what marketing allows you to accomplish.
What customer acquisition is
I came across this illustration and couldn’t help but think that probably 80% of business or more have a customer acquisition process that looks like this.
And then wonder why is it hard, costly and just doesn’t work…
Well, ladies and gentlemen, this is not a proper customer acquisition strategy. This is just chasing people, cold calling them, spamming them, etc.
Customer acquisition is a whole different ball game.
Customer acquisition is a framework that manages the entire process of generating interest, traffic and leads to a business and converts those leads to buyers, purchases and sales.
It’s a collective of activities that sit in between sales & marketing including marketing. In businesses like e-commerce where there is no sales people, customer acquisition is essentially entirely within your marketing and performance marketing framework.
Customer acquisition is mainly focused on bringing new customers to the business. Retention is normally outside of the scope and is a responsibility of other areas in the sales and marketing departments.
Your mainly responsibility here is to ‘acquire’ new customers and do it in an effective manner.
From another perspective, customer acquisition is a series of interconnected events that build on top of each other to achieve the goal. Every component has a specific objective. For example, a digital advertising campaign might have the objective of generating warm leads and gather their
- First Name
- Last Name
- Product of interest
That’s it. That’s the only objective of the campaign. But does that mean you’ve acquired new customers? Far from it. Why do it then? It’s an important step in the right direction. From there, there are other steps you have to take to build on top of that.
Customer acquisition in the digital marketing space
For customer acquisition to be ultra-effective, you need ‘digital visibility’. You need to understand the behaviour of your audience, how they progress through your sales and marketing funnels. Have they opened that last email you sent? Have they read your proposal? How did they find you and what’s their biggest motivation?
Knowledge is money. A simple as that. The more you know about your prospective customers the more likely you are going to be able to convert them.
Disclaimer: You should work within the boundaries of ‘data privacy’ and you should consult the right people on data privacy.
The beauty of digital marketing is the unbelievable level of visibility you have when it comes to consumer and customer behaviours, needs and motivations, whether on a micro or a macro level.
Here is your digital marketing starters/essentials pack of tools to give you an incredible amount of insights and visibility.
- Google Analytics – Overall Website / App analytics, traffic, events and conversions.
- Facebook Pixel and Google Tag Manager to create custom events measurement and reporting
- Ads Platforms analytics – Google, Facebook, Programmatic, etc.
- Google Optimize – A/B Testing
- Hotjar – Heatmaps, sessions recordings, instant site survey.
- Email Marketing Platforms – Email Opens, Clicks, funnel progression, persona segmentation
- CRM – Lead scoring, customer segmentation, additional information
- Sprout Social or Mention (or alternatives) – Social listening
There are a lot of excellent digital marketing tools that are super essential for any business. You can find them in this blog post.
What KPIs to measure for effective customer acquisition
Here are the most important KPIs you want to accurately measure.
- Number of New Leads
- Cost per Lead
- Sales Conversion Time / Duration
- Funnel progression speed
- Number of New Customers
- Cost per Acquisition / Customer
- Customer Value / Purchase Value
You also want to dissect these by channel, strategy and approach. For example, if you run two lead generation campaigns (Facebook Ads, Google Ads) that flow leads to your sales team, you want to assess things like cost per acquisition and conversions for each platform to understand where the gaps are.
A lot of people tend to cut out a channel if it’s underperforming. If you have a small budget, this can make sense as you want to allocate your funds into the areas that will bring the highest returns. But this is generally a poor approach. What you want to do instead is go back to the drawing board and figure out why that channel isn’t working. Is it because your ads are not strong enough? Is it perhaps your audience targeting? If you are working with one of the best marketing agencies, you can and should expect to get deep insights on your performance marketing and your digital marketing campaigns in general. Your performance marketing is how you can navigate your way to better returns.
Similarly, in the sales environment whether face-to-face, telesales or B2B, assessing and measuring the performance and returns is how you move forward. It’s not rocket science. There is a simple process to follow.
- Research to determine the best approach you think is going to work
- Implement the approach and give it enough time
- Measure and assess performance and returns of this approach
- Decide to keep it and improve on it or introduce a new approach or both
Understanding your customer
If you understand your customers, congratulations, you’re halfway to success. From there it’s about implementing the perfect marketing strategy.
But understanding your customers isn’t always straightforward or simple. The first thing you need to do is a change of mindset within your business/organisation. Understanding your customers requires humility, empathy and openness to be wrong. It requires truly putting your customers first and at the centre of everything you do.
If you are a CMO or a Sales Director, my question to you is how much do you know about your prospective customers. Do you know about
- How they spend their time
- What they like and don’t like about your products
- The language and terminology they use
- The political views they have
- What worldly topics interest them
- How much time they spend on social media
- What are their goals and aspirations in life
- How much they earn
And the list goes on. This applies to business – B2C and B2B.
To understand your customers, you need to be one. But more importantly, you need to speak to as many as you can. There is a level of insights you’ll get from research and data (which we’ll cover in later sections) but there is a whole different level of understanding you get when you relate and understand your customers on a personal level.
My argument is this, when you genuinely understand your customers, your communication whether that is through a personal email, sales pitch, ad campaign – is going to work. You’ll be on the right wavelength. I am talking a bit outside concrete science here but I’d be happy to be proven wrong. The more dig deep and understand your customers, the more your collective creative power will become aligned to your customers.
There is no such thing as over-investing in learning about your customers and learning about people for that matter.
I wrote a whole guide on how to create proper buyer personas and customer personas. Check it out if you want to learn more about how to go about that.
How to understand what’s valuable for your customers
There is a ton of ways to do research. You can literally go from stalking your competition social media and see what their fans and customers are saying, to doing full-blown market research and buyer persona research through a marketing agency or a marketing research company or even a consultancy company. And the decision depends on the complexity of your business, the stage of growth you are in and budget constraints.
You will get valuable insights in all cases if you ensure the following principles are met.
- Collect sufficient data from a sufficient sample size. In other words, talk to enough people.
- Be 100% objective in your research. Research business is a thing and even the best can fall for it.
- Control your variables as much as possible especially if you are doing A/B testing.
- Utilise different research approaches.
Here is my top list of research methodologies.
- Published studies and statistics
- Focus groups
- Consult industry experts
In the digital world, we live in, there is nothing more abundant than information. The challenge is more in data collection, processing and hypothesis validation.
There are a ton of tools out there that can help you.
If you are just starting out, you can use something like Hotjar which is mainly a tool that allows you to understand how people experience your site through heatmaps and website session recordings but they have two awesome tools that you can use to understand your customers better.
- Incoming feedback
Through these tools, you can get instant insights from your website browsers who are essentially either your customers or prospective customers. You can ask them about their experience on your site, what they are looking for, how can you better help them, or any customer acquisition related question.
Another free and powerful tool is Google Keyword Tool which is very powerful in my opinion, 1) because it allows you to tap into most of the different search queries people make on the internet and 2) it gives you a volume estimate so that you can ascertain which queries are more searched than others. There is a lot more you can do with the tool but this is a great starting point.
Another excellent tool (paid) is Pollfish. What I love about that tool is that they help you find the right audience you want to target for your surveys and you only get charged (minimally) for the surveys you get answers for.
Build your brand reputation and leverage trust to get more sales
Trust is everything in business and so your customer acquisition strategy needs to leverage and elevate trust as much as possible. There are several effective ways to increase trust in your business starting from elevating trust in the people behind the business to the product/service quality.
Here are the top 4 I think every business should focus on
- Use video marketing to feature the business’ key leaders more often. Video marketing in it of itself is very effective in terms of reach and engagement, mind you when you use it to get your business leaders to be in front of your customers day in day out. Authenticity is key here.
- Generate and feature as many testimonials and reviews as you can. There is never enough when it comes to getting reviews and testimonials. You want to incentivise your customers to provide reviews. Giving a 5-star service or having a product that speaks for itself is great but won’t get you enough reviews. You need to get people to go out of their way to leave reviews.
- Take a consistent and solid stance on general society issues that mean a lot to people. For example, being active in promoting eco-friendly products and an environmentally friendly economy, will earn you a few points. Or it could be taking initiatives that have to do with mental health.
- Use influencers to promote your products and services. People buy from people they like. If your business is recommended by people that other people trusts, you are moving the needle indeed.
Create a true competitive advantage
A competitive advantage is NOT a lower price. I am the least advocate of price wars. I am all about the exchange of more value both ways; to customers and back to the business. Businesses that tend to focus primarily on price wars instead of innovating and developing health margins in their sales, eventually lose. On the other hand, innovation allows you to continuously charge a premium. Take a look at Apple for instance. It charges a premium for every product it sells. And how are they doing financially? Constantly on the rise. At the time of this writing, the Apple Market Cap is sitting at a whopping $2.03 Trillion.
What’s the takeaway from this? Innovate Innovate Innovate. That’s how you establish a competitive edge. Your innovation process must be focused on creating value for your customers. Value is a function of perception and reality. What some people perceive as valuable might not be seen the same way by others. But value is also a ‘real’ ‘measurable’ thing. For example, if you create a project management tool that improves productivity by 20% for customers who use it, that’s real and measurable – and worth purchasing.
Here are my top 4 categories of adding value and there of course some overlaps.
- Improving safety and minimising risk
- Increasing quality of life (very much perception-based)
- Introducing productivity and saving time
- Reducing effort and complexity to achieve a task
Take a Tesla car for example, what value does it add to its customers? Well, through its brake mechanism and AI technology used, it can detect a car crash ahead of time and stop your car before an accident happens. You can also argue that it increases your quality of life by using a renewable energy source to power the vehicle. There is more of course but you get my point. If you actually break down the value items that a Tesla car adds vs. other high-end car models, the gap is significant and perhaps that’s why Tesla has done tremendously over the last few years.
Customer acquisition requires innovation and true value in your product or service.
Use effective lead generation and sales conversion strategy
I have a whole entire guide on how to build effective lead generation and sales funnels but it’s worth touching on this here.
Your customer acquisition is essentially made up of two parts
- Generating leads
- Converting those leads
Depending on what you sell, there are many routes to take especially for the first part, that is, lead generation. Under lead generation, there is pretty much everything you do in the digital marketing world. There are some activities that are very ‘lead generation aggressive’ and some that are more indirect and ‘complementary’. For example, a Google Ads campaign is very heavy on lead generation and or sales generation. But a top of the funnel/brand awareness Facebook campaign is less heavy on lead generation and more about building the brand and paving the way. To generate leads effectively, you need to have the right combination of digital marketing tactics and the right allocation of funds and resources amongst them.
As for Sales conversions, that is a matter of your marketing funnels (covered in this guide) and human sales capability if your business model involves salespeople.
More Product or more Marketing?
I remember watching Elon Musk on the Joe Rogan Experience Podcast back in 2018. What a great podcast that was and although they talked a lot about technology and AI and other topics, they eventually moved to Tesla and Elon mentioned something that really shocking to me at the time. I can’t say I am a huge follower of Tesla. I do admire it and hope to own in the near future but I am not a crazy fan who just knows everything about it. And Elon was talking about how (I believe some of) the Tesla cars have features that nobody knows about the company doesn’t even market.
For example, they can ‘dance’. ‘The Model X can do this ballet thing to the Trans-Siberian Orchestra’ and he explained that not a lot of people knew about that feature at the time. Now after mentioning it on the show, I bet most people do know that. He also said ‘Our goal to make not exactly a car but a thing to maximize enjoyment and make maximum fun.’
My ‘customer acquisition’ mindset took me to different places when I heard that. It sparked a few questions.
- How many businesses have products/services with features existing or prospective customers know nothing about? And if they did, it would be game-changing for them and the business.
- How many businesses have products/services with features that customers don’t or wouldn’t care about?
- How do you communicate the value proposition of your product/service in the most effective way?
- What happens when you over or under engineer your product?
- What happens when you over or under market your product?
These are all somewhat overarching business strategy questions but they do impact your customer acquisition capability and are critical to think about.
For me, the product vs. marketing argument is like the chicken vs. egg analogy – which one comes first. In the most simplistic view, you can’t have effective marketing if your product sucks and a great product with bad marketing won’t grow. Both should be on a continuous improvement trajectory – feeding off each other.
On another level, your marketing tremendously helps you understand how to develop great products that can then be marketed and used to acquire more customers. Developing products without understanding what the market truly wants or needs, is money, effort and time wasted.
In this example, a dancing Tesla could be viewed that way. I am not in a position to judge that. But I do know this. Either it was
- Unnecessary or,
- Under marketed
Elon can afford to throw a ton of cool features for fun. But can you? Most businesses can’t. And nor should they be focusing on that. Your resources should be 100% focused on
- Identifying what is most valuable to your customers
- Developing the most valuable products and features
- Communicating those products and features in the most effective ways