The art of gaining new consumers or persuading consumers to purchase your products and services. Most business organizations measure the cost of customer acquisition by evaluating how much value customers bring to their businesses.
Successful customer acquisition strategies include referrals, loyalty programs and the like. One can think of it as the link between advertising and customer relationship, as it is the critical component that facilitates the acquisition of customers in a targeted and effective way.
Customer acquisition management refers to the set of methods and systems for handling customer prospects and inquiries that are generated by marketing techniques.
Effective customer acquisition requires considerable planning and strategizing. Even though there are a variety of customer acquisition strategies, some methods are more effective with certain client categories. There are also a few essential steps that is integral to any customer acquisition plan.
The first step is to identify quality potential customers. Usually this involves reaching out to potential customers through call centers and mailing lists. These methods allow companies to learn first hand which potential customers or “leads” express interest in or already use products similar to theirs.
Following this, businesses analyze the leads further using research to determine the viability and potential of the lead. If the probability of turning the lead into a new customer are high, his status is upgraded to that of prospect and assigned a salesperson for further engagement.
A customer acquisition program then tries to create a relationship with prospects to identify their requirements and determine how concerned products can fulfill those needs. Salespeople try to identify unstated needs based on data from such ongoing conversations and interactions with the prospects. This can also help discover additional needs of prospects and offer additional choice to the prospects weaning them away from other products they are considering.
No business would like to spend more on acquiring customers than what such customers bring to their business. The cost of customer acquisition (CAC) is determined by dividing the total costs associated with acquisition by total new customers, over a specific time period. Businesses consider CAC an important metric along with the lifetime value (LTV) of a customer.
Businesses need to generate sufficient return on investment (ROI) from marketing and sales campaigns geared toward customer acquisition. The goal is to achieve a LTV to CAC ratio, with a 3:1 ratio considered optimum.
For companies to grow, they should find ways to attract, satisfy, and retain customers.
Using appropriate acquisition and targeted strategies helps companies grow by gaining quality customers in a cost effective way. Newer companies or those with less prominent products need to have a greater stress on customer acquisition. Even when companies and products mature, they need to retain customers. Customer retention costs are often lower than that of acquisition.
Customer acquisition costs require a thorough analysis of associated benefits. The benefits need to be fully quantified in order for companies to accurately gauge the value addition from their customer acquisition process.