A Definition of Customer Acquisition
Put simply, customer acquisition refers to gaining new consumers. Acquiring new customers involves persuading consumers to purchase a company’s products and/or services. Companies and organizations consider the cost of customer acquisition as an important measure in evaluating how much value customers bring to their businesses. Customer acquisition management refers to the set of methodologies and systems for managing customer prospects and inquiries that are generated by a variety of marketing techniques. Some successful customer acquisition strategies include customer referrals, customer loyalty programs, and the like. One way to think about customer acquisition management is to consider it the link between advertising and customer relationship management, as it is the critical connection that facilitates the acquisition of targeted customers in an effective way.
The Customer Acquisition Process
Customer acquisition requires forethought and strategies. In fact, there are many different customer acquisition strategies that are used as part of the customer acquisition process. Some customer acquisition methods are more effective with specific types of clients, but there are a few basic steps that are included in any type of customer acquisition plan.
The first step of any basic customer acquisition plan is to identify quality potential customers. One customer acquisition strategy involves reaching out to potential customers through call centers and mailing lists. These customer acquisition methods allow companies to determine which individuals and businesses express interest in or already use products similar to those of your company. Next, companies qualify the leads a little further using various research methods to determine the viability of the given lead. If the chances seem likely that you will be able to acquire this new customer, his status is upgraded to that of prospect and assigned to a salesperson for further interaction.
Many customer acquisition programs then include establishing a relationship with prospects to identify their needs and determine how the products offered relate to those needs. Salespeople also attempt to identify unstated needs; these are based on data provided by ongoing conversations and interactions with the prospects. Salespeople also can identify additional needs of prospects and offer additional products so the prospects see a greater value from purchasing the products they already are considering.
Customer Acquisition Cost
The last thing a company wants to do is spend more on acquiring customers than the customers spend. The cost of customer acquisition (CAC) is the price companies pay to acquire new customers. In its simplest form, the CAC is determined by dividing the total costs associated with acquisition by total new customers, within a specific time period. The cost of customer acquisition is an important metric for companies to consider, along with the lifetime value of a customer. Companies and organizations need to get a return on investment (ROI) from marketing and sales campaigns geared toward customer acquisition. The goal is to achieve a high lifetime value (LTV) to CAC ratio. A 3:1 LTV:CAC ratio is a perfect level.
Benefits of Customer Acquisition
Using appropriate customer acquisition strategies helps companies to grow, and targeted customer acquisition programs help companies acquire the right customers in a cost effective way. New companies or those with less established products especially need to place a greater focus on customer acquisition. As companies mature, they can shift their focus to customer retention. It’s important to keep in mind that customer acquisition costs often are higher than customer retention costs and therefore require a thorough analysis of the associated benefits. The acquisition benefits also need to be fully quantified in order for companies to accurately gauge the relative value of their customer acquisition process. For established companies to grow most effectively, they should find ways to attract, satisfy, and retain customers.
To increase chances of retention, you need a 360-degree customer view of a customer’s behavior, preferences and needs to deliver effective engagements. See how the core feature of the Intelligent Engagement Platform, Customer DNA provides that holistic customer view.
Looking for even more information on customer acquisition, check out these articles and helpful resources:
- Customer Acquisition Strategies: It’s All in the DNA
- Acquisition and Beyond: Using Customer DNA to Gain and Keep Valuable Customers
- Predicting Customer Behavior with Customer Conversation Modeling (CCM)