The Complete Guide to Customer Acquisition

hi this is {narrator name}. Customer acquisition incorporates practices involved in gaining new customers, which is the life-blood of any company, be it large or small.

That is why successful customer acquisition strategies are beyond doubt the number one priority of all the serious and smart business owners.

The acquisition of new customers starts with your product or business goal you are trying to accomplish. Such goals revolve around targeting and acquiring a group of potential customers and converting them into loyal customers.

Different techniques used for acquiring new customers involve marketing techniques, advertising strategies, lead generation maneuvers, etc. to target and meet with the target audiences.

This class will take you deep into the world of customer acquisition practices, and help you understand the best methods to widen your reach and optimize your conversions.   we also learn about how to conduct observational research? And

Effect of complaint resolution on customer retention.. See you in the class.

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Customer retention – Meaning, Importance and Strategies

If it is difficult to attract customers, it is more difficult to retain them. Most marketing theories and practices over time have relied on attracting new customers rather then retaining the old ones. A sustainable business however, concentrates on its new as well as old customers equally.

Traditionally, the emphasis has been more on new customers rather than customer retention. Customer retention needs more of building relationships and keeping after sales commitments intact. The better the after sales service, the better will be customer retention. Thus companies would be wise to perform customer satisfaction surveys regularly as customer satisfaction is the key to customer retention.

So, without taking any further, let us get started right away-

Introduction to Customer Acquisition

In these times of globalization and the internet, the trends around the world are changing.

The new generation is keen on entrepreneurship rather than being trapped in a cycle of 9 to 5 jobs. We have seen an enormous rise in the number of start-ups in recent years.

And looking at the trend, a lot of information about starting a start-up or opening a business is available on the internet.

Although pitching your idea and getting funds from investors is an essential part of a start-up, gaining customers is the crux.

And here is where the term ‘customer acquisition’ comes into play.

Thinking about the value of the customer over time, tracking their inclinations, reviewing their engagements, and thinking like a customer are some of the integral parts of effective acquisition strategies that businesses should follow to target and convert new customers.

Let us dive deeper into the world of customer acquisition and understand what exactly it is in its simplest form-

What is customer acquisition?

What is customer acquisition

In straightforward words, gaining new customers may be called customer acquisition.

It is the process by which you attract and bring more clients and customers to your business. The aim of this process is two-fold.

Firstly, it focuses on creating a reliable strategy that can be used to gain customers. Secondly, the acquisition strategy is made so that it can evolve with the changing trends in the market.

Now, when you are well aware of what acquisition of customer is, let us now understand why it is essential for you-

Importance of Customer Acquisition

Customer acquisition is essential to businesses of all sizes and types. Gaining customers is the basic necessity of any business. Customer acquisition enables your business to-

  • Meet maintenance costs
  • Pay your employees
  • Gain profits and reinvest the capital
  • Acts as evidence of growth for the investors, partners, shareholders, etc.

Steps involved in acquiring Customers

How does a consumer become your customer? There are three necessary steps of how you meet your potential customers and convert them into customers.

  1. The consumer becomes aware of your brand through some means.
  2. He considers the utility value and affordability of your product/ service to him.
  3. After considering the details, he makes an informed decision to become a paying customer of your business.

Some people consider the acquisition of customers similar to the lead generation strategies. Let us understand the exact difference between them here and now-

After looking at the steps, the fundamental question is, what is the difference between lead generation and customer acquisition. We will help you understand it better.

Now, considering the three steps, lead generation can be called the first step.

Those three steps as a whole are called customer acquisition. In short, lead generation can be called a part of customer acquisition.

All in all, lead generation revolves around the strategies for widening your reach, while customer acquisition is dedicated to converting those leads into loyal customers. Let us now go through some of the strategies that can supercharge your acquisition practices for improving the customer base-

Customer Acquisition Strategies

Customer Acquisition Strategies

The plans you employ to attract consumers to your business and make them your customers are customer acquisition strategies.

Your customer acquisition strategy includes all the steps you take to make a consumer buy your product or service. Effectively, this implies that you will have to use your time and money to devise and implement your customer acquisition strategies.

How to create an efficient Customer Acquisition Strategy?

To devise an efficient customer acquisition strategy, three steps must be followed.

1. Identify the target audience

Every business has its target customers. Not everyone will buy your product/ service.

And to gain these customers, you will first have to identify your target audience. This is the group of prospective consumers who you think would be interested in buying your product or service.

All the customer acquisition strategies must be concentrated on that group. Knowing your target audience turns out to be extremely useful because it lets you channelize your resources onto a specific group of people.

That way, you can pay more attention to your potential customers and make the most of your funds.

2. Acquisition Strategies

Now that you know your target audience, you can devise various strategies to make them buy your product. Below listed are some of the best tried and tested methods of acquisition.

1. Landing Pages

The first step to all of this should be designing a perfect landing page. It should be pretty, attractive and should invite your potential customer to buy your product or service.

Different ways you can use landing pages for customer acquisition are-

  • Use landing page(s) integrated into site architecture and style
  • Opt for bespoke landing pages that are not part of the main site structure or style
  • Use Microsites with several pages or tabbed landing pages
  • Your home page can also be a landing page
  • Best converting landing pages are minimalist in design
  • CTA or Call to Action is the heart of every landing page
  • Use effective imagery in your landing pages

2. Content Marketing

All types of businesses can take advantage of this strategy. You can market your brand by providing eBooks, videos, images, and blog posts. Amateurs, professionals, and consumers continually search for products like these.

Also, you can project your brand authority by sharing your knowledge and expertise. This way, you can boost lead generation as the potential customers casually enter your website in search of information.

If they get valuable and useful content here, they will most certainly think about buying your product or service. The different content marketing strategy you can use for customer acquisition is-

  • Account-Based Marketing Content Strategy
  • Surveying Your Long-time Customers
  • Measuring How Your Sales Teams Are Using Content
  • Use content to increase brand awareness

3. Live Chat

Live chat is the most effective and interactive way to communicate with your potential customers, know what they want, and deliver it to them.

If the customers are impressed by your service, skill, and knowledge, they will most certainly consider buying your product or service.

A better option for this is an automated live chat by a live chat software program. This is efficient, as well as cost-effective. One to one interaction with the customers increases their engagement with your brand on a personal level.

Some of the top live chat tools you can incorporate in your customer acquisition strategy are-

  • HubSpot Live Chat
  • Olark
  • Drift
  • Intercom
  • SnapEngage
  • Pure Chat
  • ClickDesk
  • Kayako
  • Velaro
  • Bold360

4. Social Media Marketing

Social media has the power to spread your content like fire. It is the most effective tool as of now because of its ease of use and popularity.

Almost every person using the internet uses some of the other social media websites. It remains your responsibility to make the most out of this handy advertising tool.

Some of the key ways to use social media marketing for optimizing your customer acquisition strategies are-

  • Listening to your target audiences
  • Engaging your target audiences with content
  • Creating immediate opportunities to shop
  • Measuring and refining campaigns in real-time

5. Email Marketing

Email marketing might only seem an outdated option but is still highly relevant.

It is the most non-intrusive way of marketing. Emails have a touch of formality that modern-day social media websites lack.

So, the customer retention rate in this strategy is higher. Also, you get to contact the customer directly through their inbox. Unlike social media websites, you do not remain dependent on algorithms and online behavior of the customer.

Best email marketing practices for customer acquisition are-

  • Write to a real person, not to a list
  • Automating the customer journey
  • Never bury the lead
  • Creating lead magnet
  • Running a contest
  • Optimizing emails for mobile
  • Timing your emails
  • Make emails easy to share
  • Start using A/B Testing
  • Use your website to grow your email list
  • Include CTAs at the front and center

6. Referral Programs

It is a common human tendency that a person will believe another person rather than any image, book, video, or website.

Referral programs will help your brand grow by generating word of mouth publicity.

These will bring a lot of customers to the site and product page.

A simple trick of rewarding the referrer as well as the purchaser will help you generate a lot of extra traffic. Everybody wants to get paid, and you can use this tendency for your benefit.

7. Advancement

By using the above strategies, your page will finally start getting traffic.

But maintaining this traffic is also essential.

So, always keeping your website updated and optimized will further help to convert the visitor traffic into paying customers.

8. Analytics

It is crucial to understand which of your strategies are working correctly and which are not.

That way, you can focus on the best ones and discard the useless ones.

Utilizing analytics to the full extent will help you funnel your resources towards effective strategies and increase the business manifold.

Tools to Support Customer Acquisition Strategies

Tools to Support Customer Acquisition Strategies

Now, to convert all of the above strategies into reality, you will need a lot of tools.

Luckily, a wide range of tools is available in the market. Since the industry experts meticulously design these tools, they will surely help to turn your potential customers into paying customers. Some of the best ones are listed below.

1. Drift

Cost- Pricing starts from $0 per month.

What does it do- turns conversations into conversions

2. Unbounce

Cost- Pricing starts from $79 per month

What does it do- It is landing-page development software. It will help you website pages, landing pages, and popups quickly. It comes equipped with a drag and drop mechanism.

3. Referral Candy

Cost- Pricing starts from $49 per month

It is a customer acquisition tool and a referral marketer. The device will provide incentives to its customers if they promote your product within their network.

3. Customer Acquisition Cost

All of the customer acquisition strategies come with a cost. Whether it may be a social media advertisement or landing page development software, all of these strategies need to be paid.

And, to run a successful business, one has to ensure that whatever one is spending to acquire a customer should never be more significant than what the customer is paying the company. If this doesn’t happen, the company will spend more than what it is earning and incur losses despite high sales.

So, to check the efficiency of your customer acquisition strategy, you will have to calculate your customer acquisition cost (CAC).

CAC can be calculated by using a straightforward formula which goes as follows-

CAC= MC/ CA where,

  • CAC- customer acquisition cost
  • MC- marketing costs
  • CA- customers acquired

Now, the marketing costs will include every cost like salaries of employees, the price of resources, etc. So, the formula to calculate CAC is further modified as

CAC= (MC+ W+ S+ OS+ OH) / CA where,

  • CAC- customer acquisition cost
  • MC- marketing cost
  • W- wages of employees
  • S- marketing and sales software
  • OS- outsourced services
  • OH- overhead for marketing and sales
  • CA- customers acquired

By checking the CAC from time to time, you can make sure that it remains profitable. If the costs become unreasonable, you can always cut down the marketing expenses or increase the value per customer.

Wrapping thoughts!

Customer Acquisition may sound simple attraction of customers but is a pretty complicated process. But by using the information and strategies above, you can generate a healthy customer base and build a stable and profitable business.

On the concluding note, we hope that paying heed upon the above-mentioned customer acquisition strategies will help you in finding out, approaching, and fostering new and existing customer relationships.

What are your thoughts about the importance of customer acquisition in optimizing business growth, conversions, and sales?

Customer Retention is important because a highly satisfied customer stays longer with the company, buys and self promotes new products being launched by the company, is optimal for feedback on improving the organization and the cost of this customer is much less then attracting new customers.

Customer complaints is NOT a measure of customer satisfaction. 95% of people never complain to a company. They just move on to another brand. Thus using toll free numbers and suggestions forms has become a norm in major MNC’s as well as retail chains. Just so they can reach out to their customers, and possibly bring back lost customers (Refer – cost of lost customers)

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Effect of complaint resolution on customer retention

If a customer complains, The rate at which complains are solved are also important for customer retention. Market research has concluded that after complaint resolution, 50% to 70% customers are retained. However, if the complaint is resolved within optimum time (mostly 24 hours), the rate of retention goes upto 95%. Furthermore, About 30% customers whose complaints were solved recommend the same company to an average of 5 people thereby increasing the word of mouth promotions.

Customer Retention programmes

Finding the patterns of customer defection is important to devise optimum customer retention programs. If you wanna retain lost customers, then first you need to find out WHY these customers are leaving your brand / product. This can be done by analyzing internal records, sales calls, pricing and product surveys and competition studies. For example – Each and every call in a customer service department is recorded so as to improve the quality of customer calls over time. Thus, some key questions to be asked are

  • What is the rate of defection?
  • Does retention vary by office, region, sales executives or distributor? (To find out why customer retention is higher in some places)
  • Does your pricing have a relation to customers and if yes, what is the magnitude of the effect.
  • Where do your lost customers usually go? Which brand / product and why?
  • What are the retention figures for your sector / industry?
  • Which company in your sector retains their customers the longest and why?

These are some questions which a company can ask of itself while devising a customer retention programme.

Customer Retention Video

Interesting facts on customer retention

  • Acquiring new customers comprises of five times the cost of retaining your customers.
  • An average company loses 10% of its customers each year.
  • Lessening the defection rate by as low as 5% can increase companies profits by 25% depending on industry standards.
  • Customer profits keep on increasing over the life of the retained customer as cost in retaining the customer becomes lower and lower.

These facts in themselves explain the need of customer retention Why would you want to spend 5 times your hard earned profits if you can tweak your own organization and thereby retain customers.Some excellent examples over time have been SamsungFordHyundaiNikeAquafinaAppleMcDonaldsPepsiStarbucks, Estee lauder and Walmart.

Customer Retention Strategies

1. By Offering Financial Benefits

There are two financial benefits which a firm can offer for customer retention. First would be frequency programs (FP) and the other is club marketing program.

1.a) Frequency programs (FPs)

The frequency programs are in essence awards given to a customer who buy regularly and in substantial amount. The frequency program works on the 80-20 model wherein it believes that 80% of the business will be driven by 20% of repeat customers. American airlines was one of the first companies to introduce frequency program wherein it gave free mileage credits to its customers. It was soon followed by Marriott which started its honored guest program. Credit card companies too were soon to adopt this function and started offering points on card usage.

Financial benefits for customer retention

Data suggests that the first company to introduce frequency programs benefits the most. However once competitors start copying the strategy, frequency programs can become a burden as you have to increase your offerings. This also opens room for creativity and therefore there are airlines nowadays who offer different kinds of loyalty programs based on the customers flying habits thereby customizing the program altogether.

1.b) Club Membership

Another financial benefit which can be given is when customers are offered to become a part of a club exclusive to the brand. Club memberships can be of the open type wherein anyone who buys a product or a service can be given entry or it can be the exclusive types wherein either there is a criteria for entering the club or you have to make a payment to be a part of that club.

2. Building Structural Ties

Three prominent ways to make strong structural ties with customers include

2.a) Creating Long term contracts

If you take a yearly subscription of a magazine or a newspaper, it is ensured that you will be a customer for the company for a minimum of 1 year. Thus it has retained a one time customer for a whole year. A cable network can offer 6 months plans for retaining the customers. An Internet service provider can have varying packages for customer retention.

2.b) Charge lower price to customers who buy large supplies

This method is especially used in modern retail and in fact has been the best performing tactic of modern retail. Offering discounts for regular customers as well as giving discounts for purchase of a certain value has motivated people to visit the same store over and over again thereby increasing customer retention.

2.c) Turn the service into long term

The frequent flier miles concept is used widely in airlines to retain customers for a long time. In this strategy, if the customer flies a certain set of miles he is offered a reward and recognition. Similarly, the more miles he flies, the more rewards and recognition he gets. Thus the service is by itself turned into long term for the customer and he would like to take as much advantage of the service as he can.

3) Increasing social bonds for customer retention –

Especially true for services sectors, increasing social bonds with the right cues helps the customer relate better with the service / product and therefore helps in developing social bonds with the company / brand. Once such social bonds are developed, the customer rarely shifts to another brand. A typical example would include Green marketing adopted by many banks which becomes a social bonding factor for people who love going green.

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