How to Grow Better With Smart Customer Acquisition

Weronika Masternak

Weronika Masternak

23 min read
Jun 5, 2024

Did you know that acquiring new customers can cost five times more than retaining existing ones?

Let’s face it! Competition is fierce, and customer expectations are tighter than ever. You must adopt innovative ways to expand your client base and drive growth.

But what sets apart the truly successful ones? How do they navigate the market noise and emerge as leaders in their niche? What’s the process to capture the attention of potential buyers in a crowded marketplace?

Customer acquisition isn’t just about attracting random leads! ❌

It’s about strategically connecting with the right audience, at the right time, and in the right way ✅

Let’s explore strategic approaches to acquiring customers and cost optimization to propel your business forward and gain an edge in your industry.

Understanding customer acquisition

Customer acquisition refers to gaining new customers or clients for a business. It includes strategies, techniques, and channels for attracting individuals who have the potential to become paying customers.

Acquisition begins the moment a new customer comes in contact with your business. If your company is brand-new, customer acquisition is a top priority, as your main goal is to attract new consumers. 

After some time, customer retention should be the aim of your next company because retaining the ones you have is also at the core — loyal customers who are also repeat purchasers. These two aspects, namely acquisition and retention, work together in marketing to grow the business and maintain sales.

Major customer acquisition channels include email marketing, company website, paid ads, referrals, providing excellent customer service, and search engines. You can use them to identify, access, engage, and grow potential customers.

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Acquisition funnel

Think of the acquisition funnel as your guide to attracting more people to your business, building trust, and encouraging them to spend money. You’ll see how this will turn casual visitors into valuable customers.

Here’s a quick rundown of the customer journey, broken down into five stages:

  1. Awareness is where people first hear about your brand through ads on Facebook, blog posts, emails, etc.

  2. At the interest stage, potential customers might start looking for more info about your company. Guarantee your website has detailed descriptions and comparison charts to keep them hooked.

  3. Consideration is where the action starts! People might sign up for your mailing list, book a free trial, or request a sample.

  4. At the intent stage, users become qualified leads, like when they click “add to cart.” Sometimes, they might hesitate, so use quick surveys to find out why.

  5. Purchase is the final step when leads turn into actual customers. Your acquisition strategy worked, and now they’re buying from you.

But you probably already know all this 😉

Importance of customer acquisition

Customers have too many options available right now, and you can’t just sit around and hope they’ll rush to you. Your business objectives can only be achieved if you make an effort to acquire new consumers.

Here are some key factors showing why customer acquisition is crucial for your business growth:

Instead of relying on existing customers, you must engage the target audience for new prospects. Understanding new customers’ preferences can diversify your customer base and expand your services/products.

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Exploring customer acquisition cost (CAC)

There’s an old saying, “You need to spend money to make money.” But again, how would you know if you are spending the right amount of money on customer acquisition methods?

You can calculate customer acquisition through a formula and understand your spending requirements.

CAC is the sales and marketing cost of acquiring a new customer over a specific period. Calculating it aims to optimize the customer acquisition process while generating stable revenue.

It’s a crucial business metric that measures all amounts spent on customer acquisition channels, employer salary, tech budget, agency fees, commission, and bonuses.

Keep in mind that CAC will use customer lifetime value (CLV) — the measure of revenue generation over a lifetime — to determine whether your company is operating efficiently.

Although CLV varies hugely by product and industry type, most businesses reported an excellent ratio of CLV: CAC of 3:1.

👉 Suppose your customer acquisition cost is $50 per customer. Then, CLV should be more than $50. This means these customers will spend over $50 over a certain period. If it’s less, your business cannot be viable**.**

CAC helps you compare money spent to attract a new customer against the number of new customers you gained.

How to calculate customer acquisition cost

You can use a standard CAC formula to measure customer acquisition costs.

Divide the cost of acquiring customers in a given period by the total number of customers acquired over the same period.

For example, if you spend $5,000 on sales and $3,000 on marketing while acquiring 200 new customers, your CAC will be $40. 

Components of CAC

If you aren’t sure what sales and marketing costs you need to consider in the CAC formula, here’s the list of all possible expenses:

Components of customer acquisition cost

All these expenses must be considered while calculating CAC. If your cost is high, you can minimize it by monitoring the performance of acquisition channels.

For example, you could track which social media platform has the highest engagement and invest more effort instead of local ad channels. Also, you can hire skilled employees who create quality content for your business.

I know that customer acquisition is complex, but coordinating with the marketing team and improving customer service help the sales team achieve their target.

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Three proven strategies for successful customer acquisition

A customer acquisition strategy is a high-level business plan to attract new customers. While promoting your business, a single channel isn’t enough to drive sales. You must bring traffic to your site, grow your social media presence, and develop brand awareness to generate conversions.

👉 The best approach is to try various techniques to attract, engage, and convert the traffic into paying customers.

Here are some strategies you can adopt, no matter what type of business you run:

1. Inbound marketing

Inbound marketing involves creating and distributing helpful, relevant content to engage your target audience organically. The process builds trust and credibility among potential customers by offering relevant information and experiences.

According to ZipDo, inbound marketing can generate 54% more leads and reduce costs by 62% per lead compared to traditional outbound marketing.

Here are some key inbound marketing tactics to acquire customers and transform your business:

A. Content marketing

The core of inbound marketing is creating high-quality content that delivers value and resonates with your target audience. You can use blog posts, articles, videos, podcasts, infographics, eBooks, and webinars to solve user problems and help them genuinely.

Also, try several content types: informative, educational, entertaining, or inspirational to capture the user’s attention and build topical authority in a field.

Content types

To generate more leads, use it at every stage of your customer acquisition funnel (awareness, interest, consideration, intent, and purchase).

Use heatmaps to understand user engagement, and add feedback widgets to identify gaps in your content roadmap. Consistent content creation and marketing will establish your brand as a leader in a specific domain.

A heatmap example.

Source

B. Search engine optimization (SEO)

Search engine optimization is the process of improving your website for better search engine rankings. The ranked pages will bring organic traffic to your website, and you can attract new customers without spending on paid advertising.

To rank higher in search engine results pages (SERPs) for relevant keywords, try to:

Stay up-to-date with the latest SEO practices by following reputable sources such as Google’s official Webmaster Central Blog, SEO industry blogs like Ahrefs, Moz, Search Engine Land, and SEMrush, and participating in forums like WebmasterWorld and the Google Search Central Help Community.

Additionally, consider subscribing to newsletters and following SEO experts on social media platforms for real-time updates. However, never compromise user experience. Compared to algorithms, always prioritize your customers and focus on delivering value.

Also, track bounce rates and funnel drop-offs throughout the customer journey and fix the loopholes. Attain quality traffic to improve the chance of conversion at a lower acquisition cost.

Example of bounce rates for industries.

Source

C. Lead generation and brand awareness 

Quality content is a magnet for attracting leads and capturing the contact information of potential customers. You can offer gated content like ebooks, whitepapers, or case studies and ask for contact information. Then, use the leads and create targeted campaigns for your audience.

Gated content example

Source

Inbound marketing will improve your brand awareness, build credibility and trust, and differentiate you from competitors. It’ll also foster positive relationships, drive qualified traffic, and ultimately achieve long-term organic growth and success.

2. Social media and digital campaigns

On average, people spend more than two hours on social media, and platforms like Facebook, Twitter, and Instagram have billions of active users. Identify the channels where your target audience hangs out.

For example, if you sell customer relationship management (CRM) software, focus on LinkedIn and X (previously Twitter). Conversely, a fashion brand should prioritize TikTok and Instagram, as they’re visually oriented and share fashion and lifestyle content.

You require strategic planning and active engagement to drive conversions through these platforms.

Here’s how to use these customer acquisition channels:

Digital customer acquisition through LinkedIn and Instagram

Source

Run social media campaigns, measure performance, identify trends, and optimize your strategies. Use the data to refine your targeting and be creative to maximize engagement and drive results.

3. Email marketing

Email marketing is all about creating targeted and segmented campaigns that nurture leads and drive conversions. It can be used to build positive relations with your customers, keep potential prospects engaged, and secure new sales.

Always create dynamic and personalized content and share your message directly in subscribers’ inboxes. Send the right message at the right time and use segmentation for a cohesive experience. Don’t overload your emails with multiple steps — keep your message focused around one clear call to action.

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To engage potential customers through email marketing, the steps involve:

A/B testing in email marketing

While sending emails, provide precise opt-in and opt-out mechanisms and respect subscribers’ privacy preferences.

Monitor metrics such as open rates, click-through rates, conversion rates, and unsubscribe rates to analyze your campaigns’ performance. Identify areas for improvement and refine your marketing efforts to generate leads and drive revenue.

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4. Referral programs

Your audience understands that you’re dedicated to promoting your brand positively by sharing informative content. Consequently, they don’t expect an unbiased evaluation of your products or services from you but rather from other customers.

Encouraging current customers to tell others about your business through referral programs is smart. You can incentivize your customers to refer the company to friends, family, or colleagues.

Email marketing is a solid place to start this program. Even though you may feel like you can’t control it much, it’s a great way to get new customers. 

To make it work well, offer a reward or discount for them and attract more interested people to join. This will increase interest in your business and build trust and credibility.

When a satisfied customer recommends your product or service to someone they know, it carries more weight than other marketing messages. Also, the customer acquisition costs through referral are typically lower, with a high return on investment.

Referral program customer journey

You’ll also get higher-quality leads, as referred customers are genuinely interested in the brand, resulting in long-term customer value. You can enjoy expanded reach and growth while building customer engagement and advocacy.

By incentivizing referrals, your customers will become brand ambassadors, spreading positive word-of-mouth and improving brand affinity within the community.

5. Partnerships and collaborations

Collaborations with other businesses offer opportunities to expand your customer channels and reach new audiences. You can form strategic alliances and leverage each other’s strengths, resources, and customer bases for mutual benefit.

Gain access to new market segments and share your products or services with a broader audience. Partnering with reputable businesses enhances credibility and trust, leading to increased confidence.

Consider engaging in cross-promotion and co-marketing initiatives such as co-branded campaigns, joint events, shared content creation, or exclusive offers for each other’s customers.

Additionally, create value-added offerings through product or service bundling or package deals to drive incremental sales. Building mutual support and collaboration between businesses amplifies your message and increases visibility, creating a supportive ecosystem that benefits both companies and their customers.

For instance, LiveChat’s Partner Program offers several ways to collaborate and grow your business:

Through these programs, LiveChat partners can strengthen their online presence, discover new revenue streams, and grow their customer base by leveraging the extensive network and resources provided by LiveChat.

Affiliate Program example.

Source

Optimizing your CAC

After implementing customer acquisition strategies and assessing the cost, you might find yourself in an unhappy situation…

If your customer acquisition cost (CAC) is too high, here are some tips on funnel optimization to convert more visitors into customers.

Strategies to optimize customer acquisition cost

1. Improving conversion rates

Conversion rate optimization will maximize the return on your marketing investment. You’ll be spending less on your marketing efforts while earning more customers. Also, it’ll improve your revenue growth and capitalize on the potential of your business.

Here are some of the best tactics for your target audience and business goals:

A. Streamlined user experience

Make your website user-friendly and easy to navigate. Simplify menus, use clear calls-to-action (CTAs), and reduce the number of clicks required for visitors to find information or purchase. Create a seamless browsing experience to reduce friction and encourage visitors to explore further.

B. Optimized landing pages

Design dedicated pages for specific campaigns to offer a focused and relevant experience. Use persuasive copywriting, compelling visuals, and targeted CTAs to guide visitors toward desired actions, such as signing up for a trial or downloading an eBook.

C. Improved page load speed

Optimize your website’s performance by compressing images, minifying code, leveraging browser caching, and using a content delivery network (CDN). Faster loading times reduce bounce rates and increase conversion chances.

D. Included responsive design

Ensure your website is optimized for mobile devices to accommodate growing users. Also, it creates a seamless and visually appealing experience across all screen sizes and improves accessibility for mobile users. Create content for different stages of the buyer’s journey to guide prospects towards conversion.

E. Optimized forms and checkout process

Streamline the form completion process and use progressive profiling to collect information gradually over multiple interactions. Don’t overwhelm your visitors with lengthy forms up front. Also, simplify the checkout process by reducing the number of steps, offering guest checkout options, and providing multiple payment methods.

F. Used social proof

Add social proof elements such as customer testimonials, reviews, case studies, and trust badges to build credibility. Highlight positive experiences from satisfied customers to build confidence in potential buyers.

G. Used retargeting

Consider retargeting campaigns to re-engage visitors who have shown interest but have yet to convert. Use personalized ads or offers based on their previous interactions and encourage them to return and complete their purchase.

H. Conducted A/B testing

Test your website and funnel elements, such as headlines, CTAs, layouts, and pricing strategies. Use A/B testing tools to experiment with variations and improve your strategy based on data achieved.

To improve conversion rates, regularly monitor metrics such as bounce rates, average session duration, and exit pages to identify areas for improvement. Use web analytics tools like Google Analytics to track user behavior, identify bottlenecks, and make decisions accordingly. You can easily reduce CAC and drive valuable customer acquisitions.

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2. Enhancing customer value

Enhance customer value to maximize the return on investment by increasing the average transaction size or purchase frequency. By increasing the revenue generated from each customer, businesses can spread their CAC over a greater lifetime value, improving profitability. 

To do so, here are some strategies:

A. Upselling and cross-selling

To encourage customers to buy more, try upselling higher-priced items or cross-selling complementary products. Personalized recommendations are a great way to do this — suggest items based on their past purchases, preferences, and browsing habits.

You can also sweeten the deal with bundle offers or discounts, which can really boost the total sale value. By using these tips, you’ll make more sales and create a better shopping experience for your customers.

B. Loyalty programs

Reward your customers for their repeat purchases with fun-tiered loyalty programs, easy-to-earn points, or exclusive perks. Give them a reason to spend more by offering points or rewards when they hit certain spending milestones or make bigger buys.

Keep them returning by throwing in special discounts, freebies, or exclusive promotions just for your loyal customers.

C. Subscription or membership models

Looking to boost your revenue and keep your cash flow steady? Offering subscription-based programs is a great way to do just that! Think about the customers who buy from you regularly — why not give them convenient options like software subscriptions, meal delivery services, or fun subscription boxes?

You can take it up a notch by introducing tiered subscription plans. These plans can offer different levels of features, making it easy to appeal to various customer segments and bump up the average revenue per customer. 

D. Dynamic pricing strategies

Tap into dynamic pricing algorithms to tweak your prices based on demand, seasons, inventory levels, or even different customer segments. Plus, don’t forget to use pricing optimization tools and analytics to spot opportunities and fine-tune your strategies for maximum profit. It’s all about working smarter, not harder!

E. Value-added services or add-ons

Boost the value of your purchases by adding premium services, warranties, or support packages as optional extras. Want to get your customers to spend a bit more? Sweeten the deal with complimentary perks like free shipping or extended warranties. These little bonuses can make a big difference, encouraging customers to see the added value and maybe even spend a bit more. 

3. Leveraging data analytics

Use data analytics to refine targeting in marketing efforts. You can gain valuable insights into customer behavior, preferences, and interactions by analyzing data from various sources. Then, optimize your marketing strategies for maximum effectiveness.

Here’s how to use analytics properly:

A. Customer segmentation

To boost your marketing strategy, start by using data analytics to break down your customer base into distinct groups based on demographics, behavior, preferences, and purchase history.

Once you identify these high-value customer segments, you’ll know who will most likely respond positively to your marketing efforts and deliver the best ROI. With this insight, you can tailor your marketing messages, offers, and promotions to target those segments, making your campaigns more relevant and effective.

B. Behavioral analysis

To really get to know your customers and how they interact with your website, products, and marketing campaigns, dive into analyzing their behavior data. Look for patterns, trends, and insights into what they like, how they browse, and what makes them want to buy.

With this info, you can tailor your marketing messages, suggest products they’ll love, and make their overall experience smoother and more enjoyable.

C. Predictive analytics

Start using predictive analytics models to get a clear picture of future customer behavior. These tools can help you forecast purchase likelihood, churn risk, and lifetime value.

By anticipating what your customers need and spotting those who might be at risk, you can take proactive steps to keep them happy and loyal. Plus, with these insights, you can make your marketing budget work harder for you by focusing on the customers who are most likely to convert or bring in the highest value. This way, you’re keeping your customers engaged and making sure your marketing efforts hit the mark.

D. Attribution modeling

To get a clear picture of how your marketing channels, campaigns, and touchpoints are driving customer conversions, start by implementing attribution modeling techniques. This will let you track and measure their impact accurately.

Once you’ve got the data, dive in to find out which channels are really pulling their weight and deserve more budget. On the flip side, you can also spot and cut out those underperforming or wasteful channels, saving you money and boosting efficiency.

E. Optimization testing

Try running A/B, multivariate, or split tests. These tests let you play around with different strategies, offers, and creative elements to see what really clicks with your audience.

By measuring and comparing the performance of these variations, you can fine-tune your campaigns based on the results. Try it, and you’ll improve targeting and relevance and make your marketing efforts more impactful and fun!

F. Real-time monitoring 

Implement real-time monitoring and analytics capabilities to track the performance of marketing campaigns. By utilizing real-time data, you can identify emerging trends, opportunities, or issues and respond quickly. Additionally, continuously monitoring critical metrics and KPIs ensures that sales and marketing efforts remain aligned with business goals and objectives.

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Measuring the impact of acquisition strategies

Measuring the impact of customer acquisition strategies is essential for evaluating efforts and making decisions to refine strategies for better results.

1. Tracking and analytics tools

2. Adjusting strategies based on metrics

Summary

Smart customer acquisition goes beyond attracting new customers — it involves strategic engagement to build lasting relationships. Optimize marketing strategies using performance metrics to enhance efficiency. Refine targeting, reduce marketing spend, and improve customer service to increase customer value and profitability. Also, it streamlines ticket management and prioritizes tasks for better organization.

Integrate automation and AI to boost operational efficiency by handling repetitive tasks and analyzing customer feedback. This is essential for product improvement, enabling customer success teams to reach out in a timely manner and maximize customer value.

Prioritizing smart customer service and acquisition helps businesses expand their customer base and cultivate loyalty, driving ongoing growth and success.