For any entrepreneur, getting your first customer is definitely something to celebrate. You’ve been working for months, or maybe even years, to build your business, and someone has finally appreciated that hard work and decided to make that first purchase. It’s exciting!
In those early stages, acquiring that first customer is all that you’re thinking about. However, while it’s no secret that getting customers to buy from you is crucial, in order to keep growing you need to focus on sustainable growth strategies.
What is customer acquisition?
Customer acquisition is one of the most-talked-about concepts in ecommerce because every business needs customers in order to succeed. Traditionally, customer acquisition is associated with expensive, unsustainable practices like aggressive advertising budgets or deep discounting strategies. But, customer acquisition is more than that, and it can be achieved strategically to get customers to stick around after that first purchase.
“Customer acquisition is the process of bringing new customers or clients to your business. The goal of this process is to create a systematic, sustainable acquisition strategy that can evolve with new trends and changes.”
According to Hubspot, customer acquisition aims to be sustainable over time; we couldn’t agree more. It is a crucial step in creating customer loyalty for every business because you can’t have loyalty without having customers in the first place. As obvious as this sounds, many brands struggle to find a balance between these two goals; in reality, acquisition is the first step in creating loyalty.
So you’ve acquired a customer—what’s next?
Customer acquisition is the first step in retaining customers and turning them into brand advocates. No matter how great your customer experience is or how engaged your current customers are, you can never stop marketing to new customers. After all, in order to grow, you need to continue adding new customers to your brand community.
The good news is that you don’t have to do all of this acquisition marketing alone: you can actually use your existing customers. One of the best acquisition marketing tools is referrals from existing customers. Referral marketing can take many different forms from word-of-mouth marketing, user-generated content, to social proof on social media.
The key to generating this type of marketing is building customer engagement, which is the second step of the customer loyalty journey. Using tools like loyalty and referral programs and exceptional customer experiences that people want to share is a great way to build engagement. Finally, this brings you to the retain stage where you are encouraging repeat purchases and creating brand advocates.
In order to grow sustainably, you need to strike a balance between marketing to potential and existing customers by monitoring your customer acquisition cost.
How to measure (and minimize) your customer acquisition cost (CAC)
In order to create a sustainable acquisition strategy, you need to evaluate your current acquisition strategy. Measuring your customer acquisition cost (CAC) is a great place to start.
CAC = $ total acquisition spend / # of customers acquired
It is important to measure your CAC to determine the effectiveness of your customer acquisition strategy. Monitoring your spending on things like advertising and discounting in relation to the number of new customers you’re acquiring is a good indicator of how much these strategies are resonating with your target audience.
Just like with any other cost, minimizing your CAC while maintaining the numbers of customers acquired is a great way to grow sustainably. Believe it or not, customer retention is one of the most effective ways to reduce your CAC. This is because repeat customers are more profitable than constantly acquiring single-purchase customers.
Trying new customer acquisition strategies for sustainable growth
While traditional customer acquisition strategies like aggressive advertising and discounting are becoming increasingly expensive, there are many other strategies that are both effective and efficient.
Let’s take a look at this acquisition in action through Maniology, a nail art brand that combines some of the best sustainable customer acquisition strategies to keep their customers coming back.
1. Customer Referrals
As you may know, your current customers are a great customer acquisition tool because people trust recommendations from their friends more than they do from brands. According to a study by Nielson, 92% of people claim to trust recommendations from family or friends. Think about your own shopping experiences: are you more likely to be converted from a pop-up ad on your screen or from a conversation with your best friend?
Leveraging this power of authentic and personalized marketing is a great way to introduce new customers to your brand. Referral programs are the perfect way to incentivize customer referrals. Maniology puts this strategy into practice with their referral program that offers existing customers the chance to earn 500 “stamps” or points for every new customer they refer.
Offering rewards to existing customers for sharing your brand on social media or through a unique referral link gives them more of a reason to share a brand they love. Meanwhile, offering rewards or discounts to the new customer is a smart strategy to encourage them to try your products. This reciprocity principle is the reason that referral programs are so successful in sustainable customer acquisition.
2. Value-Add Marketing
If you’ve ever discovered a brand through a YouTube video or a blog post then you’ve been exposed to some of their value-add content marketing. This is a great strategy that brands use in order to not only engage their users but also to acquire them in the first place.
This is because video tutorials or educational articles are a great discovery tool. When a customer discovers you through your content it means that you’re providing them with information that is relevant and interesting to them. The great news is that content is extremely shareable, making it an even stronger acquisition tool.
With a unique product, Maniology does a great job of providing educational content for their customers. With various tutorial videos and Q&A articles, the “Nail Academy” section on their website is full of material that attracts new customers and encourages them to return for more valuable content.
Designing your content marketing strategy with a sustainable, long-term goal is important. If a new customer discovers you from a certain blog post on their Facebook newsfeed, you should have a strategy to keep them returning for more content. This can be done through things like a blog subscription or personalized product recommendation emails. As long as you continue producing value-add content that is relevant to your target audience, you’ll have a sustainable acquisition tool.
3. Strategic Advertising
Although traditional advertising is one of the most expensive customer acquisition marketing strategies, it can have huge benefits with minimal costs when done right. Aggressive advertising to anyone and everyone is not the way to go if you want customers that’ll keep coming back. Being strategic about targeting your advertisements to your ideal customer persona is a more efficient and effective strategy.
The average American consumer is exposed to around 5000 ads per day. When combined with the fact that many consumers use ad-blockers, it’s hard to stand out in the digital sea of advertisements. It’s time to steer away from generic ads and move towards targeted ones that reach your customers in strategic places.
Social media advertisements are a great example of a tool that can increase both customer acquisition and retention. By being able to stand out to customers with personalized ads of products that would appeal to them (like items they once viewed, items they added to their cart, or items similar to previous purchases) you can attract new customers to your store and show previous ones that you’re ready to engage with them.
4. Brand Communities
People don’t want to feel like they’re being sold to, but they do want to feel like they belong to a community. This is why so many brands have spent considerable time and effort cultivating a community where customers can interact with each other.
Brand communities are a great way to grow sustainably because the more members you have, the more people want to join, giving you a cycle of continuous acquisition and engagement. People want to be a part of something that fits with their lifestyle.
With highly visual brands like Maniology, people often discover the brand through the community itself; it’s the brand advocates on social media that share their positive experiences and cute nail designs that draw new customers in. People want to try out the brand and product because of the loyal following they have, so they desire to be a part of what feels like an exclusive group.
Customer acquisition is a necessary step in creating customer loyalty and can be done in many sustainable ways:
- Customer referral programs allow your loyal customers to acquire new customers for you.
- Value-add marketing lets you acquire customers through quality content.
- Strategic advertising is more efficient and effective than traditional, aggressive advertising.
- Brand communities act as an acquisition tool through the desire to be a part of something exclusive.
Using sustainable strategies like these will set you on the right track to keep welcoming new customers to your brand.
Measuring your success doesn’t stop with your customer acquisition cost.
Calculate other loyalty and retention metrics to evaluate your brand’s success.
This article was originally published by our friends at Smile.io.