Customer acquisition: Turning leads into buyers

A successful customer acquisition strategy tends to focus on attracting customers who are most likely to become loyal advocates, and thus more profitable, to the business.

While much of a marketing strategy focuses on building brand awareness and expanding an organization’s reach, the practice of customer acquisition emphasizes converting a target audience into qualified leads and then into tangible sales.

This focus on metrics such as customer churn and customer lifetime value (CLV) help a business measure the effectiveness of its customer acquisition efforts—and transform first-time shoppers into paying customers. The process can involve various strategies and tactics aimed at identifying ideal customers, communicating the value of an offering, and guiding consumers through the purchasing process.

Customer acquisition is a critical aspect of business growth. Acquiring new, loyal customers increases revenue, helps expand market reach and demonstrates an organization’s long-term sustainability. It is often organized as a collaboration between marketing and sales teams.

Typically, a basic customer acquisition process follows three steps: Attracting potential leads, nurturing those leads until they’re ready to engage in a sale, and converting those leads into customers. This process can take place across multiple channels simultaneously, including:

• Content marketing through websites podcasts or other media
• Email communications
• Interactions over social media
• Text messages
• Events
• Referral and incentive programs
• Customer support interactions
• Paid ads
• Influencer partnerships
• Webinars

Today’s omnichannel, digital-first landscape makes customer acquisition more complex. Consumers have endless options and demand a frictionless journey through the customer experience, which includes prepurchase. As many as 82% of customers expense less than 10 minutes looking for an item they need.¹ Meanwhile, 96% of customers experiencing high friction are likely not to sign up for a brand’s offerings.² Potential customers want seamless, dynamic and contextual customer journeys. And they spend hours researching which products to buy.

Given the large amounts of data customer acquisition specialists handle, many organizations implement select automation or artificial intelligence (AI) tools to enhance their customer acquisition processes. This might include deploying Robotic Process Automation (RBA) for customer relationship management (CRM), using AI to recommend digital marketing strategies based on user behavior or automatically optimizing targeted advertising campaigns based on performance.

Successful customer acquisition strategies endeavor to determine a strong, concrete methodology to attract customers and make that process repeatable. Many of today’s businesses consider customer acquisition a continuous process rather than a single moment of conversion.

The customer acquisition funnel is a model outlining the stages that a potential customer goes through, from becoming aware of a brand to completing a purchase. It describes the customer acquisition process in the simplest possible terms. While individual customer acquisition tactics can vary and take place across multiple channels, these stages from brand awareness to purchase generally guide how businesses craft their overarching strategy. They represent individual components of the customer acquisition process and can be measured and audited individually.

1. Awareness: The customer relationship begins at the top of the funnel, when potential buyers become aware of a brand or product.
   
   
2. Interest: When they become aware of a new business or product, potential customers move to the interest stage, where they begin to seek more information about a potential product, service or brand. An organization’s team might make contact at this point.
   
   
3. Consideration: In this stage, a prospective customer evaluates a product against its competitors. They might read reviews, compare features, or research pricing. An organization’s team often makes contact by this phase, even if it is indirect or casual.
   
   
4. Intent: This stage might include adding an item to a cart or signing up for a trial. During this phase, an organization might more actively nurture a lead to influence them toward a purchasing decision.
   
   
5. Purchase: In the final stage of the funnel, a potential customer becomes a paying customer by making a purchase. An organization focuses on customer retention and growing loyalty by providing a delightful, seamless, ongoing experience.      

Customer acquisition, and the effective measurement of customer value, is critical for the growth and sustainability of any business. Key potential advantages of a robust customer acquisition process include: 

Acquiring a sustainable customer base directly increases sales and revenue, with each new customer representing potential repeat business and more revenue opportunities. Gaining more customers helps capture a larger share of a particular market, positioning a business more competitively within an industry.

Continuous customer acquisition allows businesses to expand sustainably, as well as to grow and scale by reaching new markets, launching new products or expanding existing services. As a customer base grows, a business can also achieve economies of scale, driving down per-unit costs and optimizing resources across an operation. 

Acquiring a diverse customer base reduces risk by mitigating dependency on a single market segment, spreading risk and providing stability in fluctuating markets. A varied customer base also opens opportunities to cross-sell and upsell different products and services to different customer segments.

Acquiring new customers allows an organization to gather data on their preferences, behaviors and purchasing patterns. This information can be used to refine products, services and marketing strategies. New customers also drive innovation, encouraging businesses to remain aligned with market trends and consumer behaviors. 

Developing an effective customer acquisition strategy involves planning and running a measurable, repeatable campaign to convert new customers. The specifics of a strategy can vary depending on the size of a business and its intended goals. Some businesses might develop a strategy to engage new customers with a specific product, while others might craft a strategy intended to diversify the organization’s entire customer base. Generally, the steps to developing a customer acquisition strategy include: 

The first step to developing an acquisition strategy involves identifying an ideal customer. This might include creating detailed buyer personas based on both internal and third-party datasets that include customer demographics, behaviors, preferences and pain points. By understanding a target audience at the most granular level, a business can tailor its acquisition efforts to specific customer preferences and needs. 

A value proposition clearly articulates why a customer would choose a particular product or service. Often, a value proposition speaks to a buyer persona’s specific pain points, needs and wants to highlight the unique benefits and services a product offers. While a value proposition might change for specific demographics or product use cases, it’s generally part of a cohesive messaging campaign. 

During this phase, an organization develops brand-specific, customer-specific and channel-specific marketing content to resonate with a target audience. This might include blog posts, programmatic advertising assets, social media posts or other advertisements. These personalized marketing messages are often crafted to address consumers’ needs at each stage of the acquisition funnel and targeted to address specific customer questions or desires.

Depending on the product and customer, lead nurturing might involve a phone call from a sales professional, an in-person meeting or an automated retargeting email campaign. The goal in this stage is to capitalize on existing interest and personalize specific offers to increase the chances a lead becomes a new customer. 

As the campaign develops, a company will typically review acquisition metrics to identify what’s working. This might include A/B testing to refine strategies or deploying advanced technologies such as AI to analyze campaign data and suggest how to improve performance over time. Using modern technologies and big data tools, during this phase an organization can continuously optimize its efforts based on current conditions. 

No customer acquisition strategy is complete without a plan to retain those customers. During the campaign and afterward, organizations typically develop strategies to retain customers and encourage repeat business. This might include automated reminders or promotions, the implementation of loyalty programs or other incentives for repeat businesses. Organizations that continuously audit and improve both their customer acquisition and retention strategies foster customer loyalty, which increases customer lifetime value in the long term. 

Customer acquisition takes place on various platforms and through multiple methods simultaneously. Typically, customer acquisition specialists work to provide contextually relevant, yet unified, messaging strategies across a diverse ecosystem of customer acquisition channels. By analyzing data on target markets and consumer personas, an organization might also tailor its methods to specific demographic groups.

Some examples of prominent customer acquisition methods include: 

Chatbots and virtual assistants: Chatbots and virtual assistants, either on a business’ website or through another platform, can answer questions and provide product information in natural language. More advanced assistants that use strong AI models might also curate packages or recommend products by using intelligent search.

Search engine optimization (SEO): SEO is a type of organic marketing that involves optimizing website content to rank higher in search engine results, making it easier for potential customers to find a product or service.

Pay-per-click (PPC) advertising: PPC ads appear at the top of search engine results, or on a social media platform. Using tools such as Google ads or Facebook ads, organizations pay a fee every time a potential lead clicks on an advertisement, making it a cost-effective way to drive targeted traffic.

Content marketing: A content marketing campaign involves creating valuable and relevant content such as blog posts, videos or other creative assets to attract and engage potential customers. Content marketing might be deployed in tandem with methods such as SEO or social media.

Social media marketing: Many businesses connect with customers over social media platforms such as Facebook or TikTok. These platforms help organizations build brand awareness and drive traffic to their websites or e-commerce stores.

Email marketing: Email remains a powerful tool for nursing leads and converting them into customers. Personalized email campaigns can guide potential customers through the acquisition funnel. This can be useful in the consideration and intent stages of customer acquisition, when a customer has demonstrated interest in a product but not yet committed to a sale.

Referral programs: Encouraging existing customers to refer new ones through incentives can be an effective and low-cost acquisition strategy.

Affiliate marketing: Partnering with affiliates, such as influencers, who promote products in exchange for a commission, or with ecosystem partner businesses can expand a company’s reach and attract new customers. 

Measuring customer acquisition is essential to understanding the effectiveness of a strategy, and among the most critical ways to optimize and grow a business. Customer acquisition specialists across industries typically use a combination of metrics to understand and adapt marketing efforts, reducing resource drain and increasing new customer acquisition.

Some of these key measurements include:

CAC, sometimes referred to as the CAC ratio, is the total cost of acquiring a single new customer, a metric that includes both marketing costs and sales expenses. While variations have been developed for specific cases—for instance, software-as-a-service (SaaS)—it’s calculated by dividing the total cost of an acquisition campaign by the number of new customers acquired. A higher CAC indicates a less efficient acquisition strategy, while a lower CAC indicates a strong campaign. 

Customer lifetime value estimates the total revenue that a business can expect from a single customer throughout their relationship with the company. This measurement, while more difficult to calculate, is a key indicator of value as it’s less expensive to retain a customer than to acquire a new one. Comparing CLV to CAC can help assess the long-term profitability of an acquisition effort. The metric can be applied to calculate the CLV of an individual customer, or the CLV of a particular customer segment. 

The customer churn rate refers to the percentage of customers who abandon business with a company over a specific period of time. A high churn rate can indicate issues with customer satisfaction, which might impact the long-term effectiveness of a customer acquisition effort. 

Conversion rate refers to the percentage or leads who take a wanted action, such as making a purchase. Higher conversion rates indicate that an acquisition funnel is effectively guiding potential customers toward making a purchase.

Collectively these metrics can be assessed to determine how successful a customer acquisition strategy is, and how well a business’ tactics are aligning with its broader goals. High churn rates can signal that an organization should alter its tactics lower in the sales funnel, or even in the postpurchase customer experience. A low CLTV might indicate that the customer acquisition strategy is primarily targeting the wrong audience. Lower conversion rates suggest a business should assess how it’s guiding potential buyers from awareness to purchase.

Today’s consumers are greeted at every turn by a deluge of content, digital marketing campaigns and special offers, making customer acquisition a competitive sector. Successful customer acquisition campaigns typically deploy a range of technologies and specialized tools to create the most seamless and intuitive possible experience for customers, from prepurchase research to final sale.

Some of these best practices include: 

Successful customer acquisition campaigns tend to reach the right person with the right message at the right time—meaning businesses often tailor their communications to meet the specific needs of different customer segments. Historically, personalized customer experiences have impacted conversion rates. Today, generative AI technologies used in marketing allow businesses to craft messaging not just for specific demographics, but for specific customers. Such hyperpersonalization campaigns have the power to dramatically increase conversion rates—and revenue—by considering an individual consumer’s past communications and behaviors. 

Many organizations use granular data analytics to inform customer acquisition strategies. This might include analyzing customer behavior, preferences and feedback to increase a campaign’s effectiveness. Today, AI-assisted tools have the capacity to analyze more data than a single person to forecast future market trends. Successful customer acquisition strategies might take recommendations from these analytics to continuously tweak and adapt a campaign, helping ensure messaging is up to date and responding to current conditions. 

Customer acquisition involves various routine tasks related to digital marketing, including the deployment of email campaigns, abandoned cart reminders and postpurchase follow-ups. In recent years, many companies have automated some of these tasks to increase efficiency and free customer acquisition specialists to focus on more creative, labor-intensive tasks. Automation tools have the capacity to surface promising leads based on behavior or automatically optimize SEO and PPC campaigns, reducing the cost of broad customer acquisition strategies. Increasingly, businesses use AI assistants to further streamline the customer acquisition process. These assistants communicate with customers in natural language and continuously learn from their interactions, providing personalization at scale for customers considering a purchase.

An omnichannel approach helps ensure that customers have a seamless and consistent experience across each platform they interact with. This strategy is essential in today’s multidevice, multiplatform world. To create a robust omnichannel customer acquisition strategy, an organization might use a centralized CRM system to maintain a unified view of customer data across all channels. They also create marketing campaigns that span from social media copy to a branded landing page and targeted email campaigns.

While acquiring new customers is an essential business function, retaining them is equally important. A focus on retention cannot only maximize the value of each customer but reduce the overall cost of acquisition. This might include proactive customer support strategies that anticipate issues or delays, allowing a business to reach out to customers before they encounter a problem. Some businesses develop longer-term engagement strategies like personalized content, special offers and regular communication. Engaged customers, and those who continue to have positive customer experiences, are more likely to stay loyal to a brand and increase revenue year-over-year.