Customer acquisition is the fuel of business growth. Even the best product in the world will eventually stagnate without a constant, reliable flow of new customers. It is bound by the natural churn of any customer base and unable to expand beyond the boundaries of its existing relationships. But customer acquisition is also one of the most expensive and least well-managed investments a company makes. Companies also throw money into non-converting channels, chase strategies that only make sense for companies with very different economics, and measure success with the wrong metrics – mistaking activity for outcome and reach for revenue. Getting customers ISN’T more doing. It is doing the right things, in the right order, with a clear understanding of who the ideal customer is, and what it costs to bring them in, versus what they are worth over time.
Define Your Ideal Customer. Exactly
All customer acquisition strategies start with the same building blocks: a clear, detailed understanding of who you’re trying to reach. This is not a demographic exercise, age, location, and income bracket describe a population, not a person. Effective customer profiling addresses the specific problem that your ideal customer is trying to solve, the alternatives they are currently using to solve it, the language they use to describe their frustration, the channels through which they discover new solutions and the factors that ultimately determine whether they buy. The more clearly a business defines its ideal customer, the more targeted and effective its acquisition efforts will be. Nobody is convinced by a message written for everyone. A message to a specific person with a specific problem, written in the language they would use to describe that problem, will convert at a dramatically higher rate.
Build a robust referral program
The most trusted source of information on any product or service is not an advertisement, a review site, or a sales pitch. It’s a recommendation from someone the prospect already knows and respects. Word of mouth has always been the most powerful customer acquisition channel there is, and a well-designed referral program systematically harnesses that power rather than leaving it to chance. A successful referral program gives customers a real reason to refer the business – be it a discount, a credit, an upgrade or a cash reward – while making the process of sharing as frictionless as possible. The best referral programs are those where the incentive is strong enough to motivate action, the sharing mechanism requires little effort and the experience the referred customer has when they arrive reinforces rather than undermines the trust that the referral created.
Invest in Content That Attracts the Right People
Content marketing is one of the most cost-effective long term customer acquisition strategies out there, and one of the most widely misunderstood. It’s not about creating content for content’s sake, but creating resources–articles, videos, guides, tools, podcasts, case studies–that the ideal customer is actively searching for, that demonstrate the business’s expertise in solving the problem the customer has, and that build the trust and familiarity that makes a purchasing decision feel safe, not risky. The unique thing about content marketing as an acquisition strategy is that it compounds: a well-written article that ranks on the first page of search results for a high-intent keyword will continue to bring in qualified visitors for months or years after it was published, at no additional cost. There’s a great deal of time and resource investment that goes into creating content that is actually useful and well-optimised, but the dividends that this pays cannot be replicated by paid advertising, which stops when the budget runs out.
Strategically Use Paid Acquisition
Paid advertising—on search engines, social media platforms, display networks and content syndication—has the big benefit of immediacy. A properly set up paid campaign can deliver qualified traffic within hours of going live, while content marketing can take months to gain traction. Used correctly, paid acquisition is a powerful tool to test messaging, discover which customer segments respond best to which offers, and rapidly scale what works. It is a costly way to generate traffic that does not convert into customers when used carelessly. Paid acquisition discipline is knowing your unit economics before scaling. Know your cost per click, your conversion rate at each stage of the funnel, your cost per acquired customer, and whether that cost is sustainably below the lifetime value of the customer you are acquiring. Paid channels that cannot prove positive unit economics at modest spend will not be profitable at scale.
Utilize strategic alliances
One of the most overlooked customer acquisition strategies for businesses of all sizes is the strategic partnership — a formal or informal agreement with another business whose customer base overlaps with your ideal customer profile but whose product doesn’t compete with yours. A partnership gives both parties access to each other’s audiences with a built in endorsement that paid advertising can’t create. Joint webinars, co-created content, bundled offerings, affiliate arrangements and referral agreements between complementary businesses can drive significant customer acquisition at a fraction of the cost of direct channel investment. True alignment is essential for successful partnerships . Both businesses should have the same type of customer, and solutions that complement rather than compete with each other, and both sides should feel the value exchange is fair.
Optimize the Conversion Pathway
But it’s not enough to just bring the right people in the door, you’ve got to change them once they’re there. A business that drives a lot of traffic to its website but can’t convert that traffic into customers doesn’t have an acquisition problem — it has a conversion problem, and more acquisition spend won’t fix it. The conversion journey – the path a prospect takes from initial awareness of the business to the point of purchase – should be clearly mapped out and optimized at each stage. Any friction point that can be removed along the way – a slow-loading page, a confusing pricing structure, an ambiguous call to action, a checkout process that involves too many steps – decreases the percentage of interested prospects that make their way through to purchase. Improving conversion rates improves the economics of all acquisition channels simultaneously, so the same spend goes further and the same traffic generates more revenue.
What Matters
The last and most fundamental discipline for good customer acquisition is measurement. This requires measuring the right metrics at all times and making decisions based on what the data actually says, not what instinct or convention suggests. Key metrics include customer acquisition cost per channel, conversion rate at each stage of the funnel, time to first purchase, and customer lifetime value. These metrics, in combination, tell us which channels are most efficiently delivering the most valuable customers, which funnel stages are leaking the most opportunity, and whether the business’s acquisition economics are improving or deteriorating over time. Companies that measure these numbers rigorously will make better acquisition decisions, spend budget more effectively and create competitive advantages that companies flying blind cannot replicate.
Good customer acquisition is not expensive. It’s precise, patient and laser focused on the customer – their needs, their language, their journey, their long term value to the business that earns their trust.
