In today’s business world, if you want to increase your revenue, you must build a solid strategy to attract new clients or retain the existing ones.
There are indeed many ways to gain customers. However, if you don’t conduct a cost-benefit analysis and establish a proper customer acquisition strategy, you won’t know if you’ll make a return on your investment.
Large businesses with significant budgets never had a problem investing in marketing. Small businesses have less money to invest, so they must be careful when deciding which customer acquisition channels to include in their marketing strategy.
For small businesses, customer loyalty is essential, as current customers can be their best promoters. Thanks to technological advancements, brands can use digital loyalty platforms to build and manage customer relationships, reward loyal customers and increase customer retention.
You can start with PassKit, our digital loyalty software, to create your digital loyalty program, provide a connected customer experience, distribute your digital passes on multiple marketing channels and track loyalty program data and redemption rates. All you need to do is sign up today and use the benefits of our 45-day free trial to see how PassKit works firsthand.
If you want to learn more about customer acquisition channels, you are at the right place. In today’s article, we will explain customer acquisition, how to develop a customer acquisition strategy, the most effective channels you can use, and how PassKit helps you acquire new customers.
Let’s start with some basic information.
What is customer acquisition?
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Customer acquisition is a method you can use to acquire new customers. You can reach new customers through marketing campaigns, sales team efforts, partnerships with existing customers, or even employee referrals.
Customer acquisition can be expensive and time-consuming, so choosing the right strategy for your business is essential. It’s also important to understand your target customer and what they want from your business. It will help you decide which channels are most effective for reaching new customers.
The right customer acquisition strategy helps you reduce costs and grow revenue. By focusing on customer acquisition early on, you can ensure that your business has a solid foundation.
Now, let’s briefly explain the importance of customer acquisition.
Why is customer acquisition important?
You can still lose clients no matter how hard you try to satisfy your customers. It is important how you recover from it.
You cannot assume your clients will always be interested in paying for your product or service. Therefore, you need to invest time and resources in customer acquisition. It is vital to have a strategy that will help your business grow even when your pool of customers is changing.
Since customers who spend their resources on your products or services drive your business, they are crucial for your profits and staying in the game. If you don’t attract new customers or keep current ones happy, your revenue will continue to decrease. It might lead to closing down your business.
Let’s check some customer acquisition stats you should be aware of in 2022.
Customer acquisition stats in 2022
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The following stats can give you more insight into customer acquisition:
- Acquiring new customers is significantly more expensive than retaining the old ones
- Overall customer acquisition costs (CAC) have increased more than 60% over the past 5 years
- Companies deem some channels to be more geared toward customer acquisition, and some towards retention
- 80% of companies believe that technology improves their customer acquisition efforts
- Out of the most popular digital lead gen channels, Pay-per-click has the highest average return on investment
- 81% of consumers trust family and friends’ recommendations for products and services
- 52% of customers want personalized offers
- 89% of companies rely on their websites the most when acquiring new customers
There are a few factors to consider when choosing the proper channels for customer acquisition. Let’s discuss them in the following section.
How to find the right customer acquisition channel for your business?
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You can find new consumers through various channels, depending on your business type. These channels can be offline or online, including social media, cold calling, sponsored ads, e-mail, paid search, influencer outreach, partnerships, and many more.
You can decide which channel to use based on your business goals, the customer data, and the budget you have at your disposal. You can also acquire customers on multiple channels simultaneously.
The online customer acquisition channels seem to be a much better choice for small businesses due to the rise of digital tools and lower expenses.
But how to start? Let’s go through all the crucial steps.
4 key steps to developing a winning customer acquisition strategy
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You should take the five steps to make the best possible customer acquisition strategy for your business.
1. Determine who your ideal clients are
Since not all customers are your best buyers, targeting inappropriate consumers might waste your time and money. You must specify your target market before investing in any client acquisition channel.
Simply identifying your ideal customer will help you eliminate ineffective or wasteful acquisition efforts and make you aware of your customers’ demands.
2. Pick your channels for acquiring customers
Once you design an ideal customer profile and detect their needs and wants, you can go through each potential channel and see which one best suits your goals.
For example, suppose your ideal customer is young and consumes a lot of video content. In that case, you can include compelling videos in your customer acquisition strategy or decide to acquire customers with Youtube ads or TikTok.
It is essential to know where and how your customers spend their time to properly approach them and increase the efficiency of your marketing efforts.
3. Create a distinct plan for every channel
Having a clear plan for each acquisition channel you are using is essential. It helps you measure each channel’s impact and decide which channels work best for your business.
It is also important to track how much time you spend on each channel. You may find that some channels require more time than others, especially if they involve additional costs like hosting fees or advertising costs.
Your plan should also outline the specific objectives for each channel and the timeframe in which you want to meet these objectives. It helps you better understand what drives results and how you could improve performance.
4. Measure data and refine your plan on the go
Data will help you understand if some channels don’t provide the desired results. By assessing your accomplishments, you can adjust your approach. If you see that investing in one channel brings you more customers, you can optimize your strategy by investing more resources to improve your results.
But what about the costs of customer acquisition strategy? In the following section, we will share three valuable tips to help you stay within your budget.
3 tips to reduce the customer acquisition cost
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Acquiring new clients should be aligned with your budget. You always have to be aware of your customer acquisition cost (CAC), which you can calculate by dividing the total money spent on the acquisition by the number of customers acquired over a specific period.
Let’s discuss three ways to reduce your overall CAC.
1. Calculate acquisition cost (CAC) for each channel
Calculating CAC for every channel you use will help you detect how many customers each of these channels bring and how much that costs you. Based on that data, you can reduce your overall CAC by decreasing your investment in less efficient channels.
2. Use existing customer base
If you have many satisfied customers that can refer other prospects and promote your business, you can significantly decrease customer acquisition costs.
Word of mouth is an excellent way of getting new customers, as people usually trust recommendations their friends or family give them. You can motivate existing customers to refer new ones by offering them rewards for their loyalty.
3. Use data to your advantage
Data is valuable for reducing customer acquisition costs. By understanding who your target audience is and what they’re looking for, you can create targeted marketing and advertising campaigns more likely to resonate with them. It will save you money in the long run by ensuring that you’re not wasting your time and resources.
Now you know how to reduce your costs, so let’s look at the best customer acquisition channels you can implement in your strategy.
8 most effective online customer acquisition channels
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Companies increasingly rely on digital customer acquisition tools, as they have proven effective, especially considering the changes that the COVID-19 pandemic brought. McKinsey research shows that companies report that 80% of their customer interactions are happening online.
We will now present you with the eight best customer acquisition channels you can utilize for your business.
1. Search engine marketing (SEO and PPC)
Search engine optimization (SEO) implies optimizing your website content to make it more visible in SERP. It represents an organic method, meaning you do not have to invest additional money for advertising. You need to adjust the content you create and implement keywords users use on search engines to make your website visible in search results.
On the other hand, Pay-per-click (PPC) ads are visible in search engine results and drive direct response from your prospects. You pay when someone clicks on your ad and visits your landing page. It includes choosing keywords your target audience uses to find content related to their needs. With the right strategy, PPC can drive faster results than SEO.
2. Content marketing
Content marketing relies on developing articles, videos, posts, guides, infographics, and similar educational or informational material and distributing it free of charge. The goal is to deliver high-value, problem-solving content units aligned with your customers’ needs to motivate them to use your product or service.
3. Video marketing
Regarding quality content, you should aim to include videos in your broader content strategy. Video production does not have to be expensive since there is a lot of SaaS you can use or freelancers willing to work on various projects.
With younger generations, videos are becoming increasingly popular. Therefore, video marketing is a channel you should include in your customer acquisition strategy if you’re targeting a younger audience.
4. Social media advertising
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Social media can help you acquire new customers and target them based on demographics and interests. Some may charge you only if your ads get clicked on or based on the number of views.
As with every other channel, the chosen method should depend on the profile of your ideal customer. You probably shouldn’t use TikTok to promote your product if your customers are seniors. In this case, Facebook would be a better choice. If you are targeting business professionals, you can start your promotion on LinkedIn.
Whatever you decide, remember to assess where and how your target audience spends their time.
5. Email marketing
Email marketing is the practice of sending targeted emails to targeted recipients to drive signups and sales.
With email marketing, you can get subscribers engaged with your brand, but more importantly, start conversations, build relationships with your existing customers and engage new ones. It’s also a great way to keep your customers up-to-date on your latest offers and promotions.
6. Referral programs
The most effective referral programs are easy to use, provide referral rewards, and have clear rules. A simple reward like a discount on services or a small gift card can make the program more enticing.
To succeed with a referral program, you must ensure that your customers are happy with your product or service. You need to invest time and money into building a fantastic product experience.
7. Affiliate marketing
It has become increasingly easy for businesses to reach new customers by sponsoring affiliate programs. In this type of marketing, companies pay a commission to affiliates each time a customer purchases a product through an affiliate link. Affiliate marketing can effectively promote new products and generate additional revenue while engaging existing or new customers.
8. Mobile marketing
Nowadays, no one goes anywhere without their mobile phone. Hours or days can pass before someone opens their email. However, most smartphone users read the messages they get right away. You can send your customers messages with different offers, notify them about new products or deals, or inform them that the products they bought have shipped and will soon be delivered.
Now let’s discuss how you can utilize your existing customers to get new ones.
Leveraging loyal customers to acquire new users
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The best way to reduce your CAC is to utilize what you already have, i.e., your current and loyal customers. Word of mouth is proven to be an excellent way of acquiring new customers, as consumers tend to trust the recommendations of those close to them.
Know who your best customers are
Discovering your audience should be the first step in any marketing campaign. You must understand your current clients to provide them with what they want or need. It is imperative to know who your most loyal customers are.
Customer data provides that knowledge. You may easily divide your clients into categories and become more aware of their demands by gathering information on their demographics such as gender, age, interests, location, and spending patterns.
Make your happy customers your brand ambassadors
You can use customer segmentation to create a personalized customer experience and improve customer relationships. Customers expect an optimal user experience and feel happier when you fulfill their specific needs. They will become ambassadors of your product or service if they are satisfied with your brand bringing you new clients without extra costs.
Leverage the power of word-of-mouth marketing
Word-of-mouth marketing is a powerful way to spread the word about your business. When customers share their experiences with others, it builds awareness and drives sales.
Word-of-mouth can be your best friend if you’re starting a company with a limited budget, as many small businesses don’t have the resources to invest in advertising campaigns. It helps you build trust and credibility in the eyes of potential customers.
Create a digital referral program
With a digital referral program, you can incentivize your customers to recommend your product or service to their friends, family, or acquaintances. For example, for every recommendation that turns a prospect into a paying customer, you can give discounts for the next purchase of your product.
Create a digital loyalty program
A digital loyalty program is an effective way to retain customers and grow your business. It’s all about making customers feel appreciated and valued. By rewarding customers for their loyalty each time they purchase with points or coupons, you can keep them returning for more. Not only that, but they’ll also start spreading the word about your business to their friends, helping you gain new customers.
Now you understand how to leverage loyal customers, let’s see how PassKit can help you with your customer acquisition and retention.
How to implement PassKit in your customer acquisition strategy
PassKit is a digital loyalty software that makes it easy to design digital loyalty programs, promote them on multiple marketing channels, gather customer data, and track redemption rates of your digital passes. It’s an excellent solution for small businesses with few resources to devote to marketing efforts.
PassKit represents an excellent opportunity to improve your customer acquisition strategy, as it helps you retain old customers and acquire new ones simultaneously. As previously said, innovative customer acquisition strategies leverage existing customers to attract new ones.
PassKit provides you with customer data you can use to understand your most loyal customers and see what would incentivize them to recommend your product and service. Then, based on data, you can optimize your loyalty programs and offer personalized rewards to your customers, improving their experience with your brand.
How does it work
PassKit allows you to create digital loyalty cards, digital coupons, or digital membership cards easily. With Passkit, you don’t have to develop your app, as it integrates with Apple Wallet and Google Pay, the mobile wallets your customers use on their smartphones wherever they go.
Through PassKit app you can design digital passes that can be added to digital wallets in just a few steps. You can choose the design of a pass that will include a barcode and necessary information for your customers. Once a customer adds your pass to their wallet, those passes will automatically be updated with every new offer you provide.
PassKit and multi-channel distribution
Multichannel distribution refers to using multiple marketing channels to promote your goods or services. PassKit can help you distribute your digital passes through various channels, therefore, also opening a possibility for customer acquisition through all of them.
Some of the channels you can use with PassKit:
- SMS marketing
- Social media marketing
- Email marketing
- Company website
- Search marketing
- Receipt marketing
- In-app advertising
- Near-store visual merchandising
- In-store visual merchandising
- NFC payment terminals
Now let’s see what kind of data PassKit analyzes for you.
PassKit and redemption rates
The PassKit dashboard provides valuable insights into how your customers use your loyalty program. You can make adjustments to improve the program and meet your customers’ needs.
You can find the number of enrolled members, the number of installed or uninstalled passes, and deleted members.
You can get a daily, monthly, or yearly overview of your loyalty program performance. You can also set the Start and End dates to get custom data.
The dashboard also shows the mobile wallets your customers use the most and which distribution channels bring you new loyalty program members. This data is essential because it helps you understand what’s working and what’s not so you can fine-tune your loyalty program and make it even more effective.
Customer acquisition channels: The bottom line
In this article, we showed you the importance of using different channels to get new paying customers while retaining and engaging your existing ones. We explained how you could design a perfect customer acquisition strategy while reducing customer acquisition costs. We also discussed the top eight channels for customer acquisition.
PassKit is a digital loyalty platform for creating loyalty programs. It helps you leverage top customer acquisition channels and improve your customer acquisition strategy. It gives you insights into your customers’ wants and needs, making it easy for you to offer them what they find attractive in terms of rewards, further motivating them to recommend your brand to potential customers.
With PassKit, you can not only design perfect loyalty programs but can introduce referral programs that will utilize your great relationships with current customers to gain new ones. It is also affordable software, making it perfect for small business owners.
Do not waste any more time. Sign up for PassKit immediately and quickly get new clients.