Acquiring new customers for your business is getting harder. The cost to acquire new customers has increased by 50% in the past five years and is expected to increase at a much faster pace in years to come.
This means it will get harder to do business in the near future and the cost of marketing will increase. Businesses with solid customer acquisition strategy will enjoy a healthy ROI.
So what you can do to acquire customers without spending more money on marketing? How to add new customers to your business every month?
Here are three tips on how to improve your brand’s customer acquisition strategy and how to stand out from the crowd.
1. Set long-term objectives
Your strategy should be driven by long-term objectives. If you’re getting new customers today, it doesn’t necessarily mean that you’ll get customers tomorrow as well.
Do you have a solid plan for the next few years?
For instance, you’re running an aggressive advertising campaign on Instagram and your business is generating a decent number of new leads every single day, but this strategy will work as long as your campaign is live.
What happens when you stop the campaign?
Do you have any alternate strategy?
This is one reason why most businesses invest in SEO because it provides your business with consistent organic customers for years to come.
Make sure your customer acquisition strategy accounts for the next few years.
2. Understand CAC and CLV
Customer acquisition strategy without measuring and understanding customer acquisition cost (CAC) and customer lifetime value (CLV) is a lethal mistake. Measuring LTV and CAC will let you know how long it takes to recoup your investment.
It is essential to have a balance between CAC and CLV, that is, CAC should be lower than CLV because this is the only way your business will be profitable in the long-run.
Unfortunately, most businesses don’t focus on these measures rather their focus is solely on customer acquisition and as long as their business is getting new customers and earns a decent profit month after month, they assume they’re moving in the right direction.
This is, however, not the case.
You might be actually paying a high cost to acquire customers. There is always a room for improvement and a well-balanced business model is what you should aim for.
3. Acquire the right customers
Not all customers that your business acquires are ‘right’. According to the famous Pareto Principle, 80% of the effect comes from 20% of the causes. When the same is translated to sales and marketing, 20% of your customers contribute to 80% of profits.
The primary focus of your customer acquisition strategy should be these 20% customers that will drive 80% of profit. It isn’t an easy task to find your business’s top 20% customers as it needs data, market research, and in-depth analysis of your target market. But it should be your top priority.
And once you start acquiring these high-contributing customers, retain them. Research shows that it costs 5x more to attract a new customer as compared to retain an existing one.
Targeted customer acquisition strategy coupled with a powerful retention strategy is what your business needs to become a market leader.
You cannot create a customer acquisition strategy, sit back, and stick with it. No, this isn’t how it works. It should be flexible enough so you can tweak it when required.
Importantly, don’t hesitate to tweak your strategy. In order to improve it, you have to revisit your customer acquisition strategy several times a year and based on what works and what doesn’t, tweak it.
This is the only way to acquire high-paying loyal customers consistently.