Customer acquisition in 2024: Definition, strategy, cost, and more

You want to tell the world about the great things you do, but you might be a little confused about the best approach. Customer acquisition is all about understanding how people discover your brand and become loyal customers, and It might just be the single most important marketing, sales, and support activity you’ll ever engage in, as it can easily determine the entire future of your business.

Many find client acquisition to be a game of chance. In this guide, we’ll prove that the process can be decoded and put into proven individual acquisition strategies. You will also learn about all the important metrics to measure your customer acquisition success, the tools you need, and tips for upgrading your existing strategy.

Why is customer acquisition crucial for businesses?

A steady stream of new customers is the key to a growing and sustainable business. No matter how great your product is, some customers are naturally bound to fall off, and without attracting new ones your business is doomed to fail sooner or later. Measuring your customer acquisition efforts also gives you a better idea of your marketing budget and return on investment.

However, customer acquisition is not just about marketing. It requires various teams, such as sales and support, to work together in acquiring and retaining customers. The rise of average customer acquisition costs by 222% in 10 years marks a great shift towards customer loyalty and retention, with great customer service leading the way. If done right, you acquire loyal customers who gladly recommend your services to others free of charge.

What is the customer acquisition funnel?

The customer acquisition funnel represents the journey potential customers take from being unaware of your brand to becoming paying customers. It helps you visualize and understand the dynamic process of attracting, converting, and retaining customers.

Imagine a regular funnel. The wide top of the funnel stands for all the people who discover your brand and interact with it. Copying the shape of a funnel, the number gradually narrows down to the group of customers who have stayed and converted – for example, made a purchase or signed up for a newsletter.

Stages of the customer acquisition funnel

There are various acquisition funnel models but in their simplest form, all of them feature the three main stages to represent the points at which potential customers become aware of the brand, consider it, and convert. To highlight the growing importance of retaining customers, we will use a funnel with customer loyalty added.

Awareness

At this stage, the potential customer, known as a lead, begins interacting with your brand. Thanks to your marketing efforts, the leads go from never having heard of your brand to discovering it and becoming interested. Your mission here is to engage a broad part of your target audience, collect information, and start nurturing them to conversion.

Consideration

Not all who become aware of your brand stick around. At the middle stage of the funnel, there are the leads whose attention you’ve captured. The leads face a problem and know a product or service like yours could be the solution.

These leads start hunting for more information. They may visit third-party reviews and compare your offer with the competition. While considering the purchase, they also might sign up for your email list or start following your brand on social media. Providing a free trial or a demo can be crucial at this stage.

Conversion

As they near the bottom of the funnel, they are ready to take action and convert. Conversion here means the main action you want them to take. Businesses often provide discount codes or other incentives to help potential customers make the final step.

Loyalty

Without this part, the customer acquisition funnel becomes a classic sales funnel. Acquiring new customers is more than just making a sale, and retaining them means lowering acquisition costs down the road.

According to G2, Loyal customers are 5x likely to repurchase and 5x likely to forgive. 4x as likely to refer and 7x as likely to try a new product or service. It means that happy customers generate more revenue and draw in new customers.

With churn rates and customer acquisition costs rising, simply paying to make up for lost customers won’t work anymore. The leading solution to this problem is providing excellent customer care throughout the customer’s whole journey.

How to craft your customer acquisition strategy

While each customer’s journey is unique and the acquisition of customers is no easy feat, understanding the customers’ journey via the acquisition funnel aids you in creating the right customer acquisition strategy for your brand.

A customer acquisition strategy is the plan to guide prospects to find your brand and eventually convert into loyal customers. If building an acquisition strategy is neglected, your marketing attempts are shots in the dark and you risk wasting time, money, and resources.

Define your goals

Before deciding on a strategy, you have to define what you want to accomplish. Setting goals will give you an idea of how to approach achieving them.

These goals should include how many customers you want to gain during a period of time, and what conversion means in your case. If you’re unsure what a good customer acquisition goal is, try basing the number on your revenue goals.

Choose the right channels

Customer acquisition channels are the platforms you use to promote your products and services, for example, organic search results, social media, or email. Your choice of channels depends on your target audience, resources, and overall strategy.

Remember to meet your customers where they are. If unsure, refer to your target audience and user personas, or analyze what works for your competition and consider if it’s right for you. For example, a clothes retailer focused on Gen Z would have a much better chance on Instagram or TikTok than Facebook, which is usually associated with older generations.

For the best results, be present on a mix of suitable channels. Moreover, you will quickly find that some channels are better suited to specific funnel stages than others. For example, blog content is good for brand awareness but falls flat in customer retention. On the other hand, email is great for retention once customers know who you are and want to receive offers and news from you.

Create a content plan

Once you know who your potential customers are and the best channels to reach them, you need to plan your content and its distribution. Try breaking the content plan down by funnel stages. Remember that a customer will need different information each step of the way. Think of what they need to get to the next stage. When in doubt, gather more data by surveying or analyzing competition.

Keep optimizing

Building and executing a customer acquisition strategy is a dynamic process, not a one-off event. Remember to keep analyzing and adjusting your strategy as your business changes.

• Analyze quantitative data: Look at the churn rate, conversion rate, customer lifetime value, and lead generation by channel to uncover weak spots. We’ll cover all of these below.
• Closer look at problem areas: quantitative data can reveal particular problem areas for you to analyze. For example, if quantitative data shows potential customers tend to get stuck at an exact spot, reviewing session recordings can help you understand the user behavior and what needs to be fixed.
• A/B Testing: Suppose your analytics shows a drop-off during checkout, and the session recordings reveal potential customers seem frustrated by the confusing layout. Create A/B testing versions with different layouts and compare their performance with the original.

How to tailor your strategy to your target audience

It’s important to understand who your target audience is before spending resources. Understanding an audience goes far beyond demographics. You need to consider their goals, motivation, habits, and behavior. Simply, put yourself in your customer’s shoes. This will allow you to craft buyer personas and remain mindful of who they are.

Besides demographic questions such as age and location, you also need to ask yourself:

• What issues are my potential customers facing that my product or service may solve?
• What are their professional roles and responsibilities?
• Where and how are they likely to research products and services?
• What social media are they prone to use?

If you already have customers, you’re ahead as you don’t need to guess who might be interested. You can base buyer personas on profiles of your existing customers, or by talking to and surveying them.

10 Proven customer acquisition strategies

1. Leveraging SEO for higher visibility

Many potential customers start their research on the most visited site in the world – Google. Try to be one of them and search for a term specific to your business. You are bound to see your competition in the top search results. What did they do to get there? They invested in search engine optimization (SEO).

The idea behind SEO is to create content that search engines can read and recognize as the most relevant, featuring it in top results and allowing it to reach more people. It’s an insanely popular strategy as it’s cheap and pieces of content can rank high even years later, and without any added costs. But be prepared for competition, as 70% of marketers already invest in it.

While it’s far from an exact science and algorithms keep changing, there are proven methods to rank better and tools to help you with the technical side of things. Tools such as URLsLab for WordPress integrate right into your content management system and guide you through the optimization process.

2. The role of content marketing in attracting customers

Content marketing is creating and distributing useful and relevant content, such as blog posts, newsletters, videos, or podcasts. It aims to attract and retain a specific audience while providing valuable information to potential customers.

This content does not pitch or sell your products, it provides helpful information while boosting brand awareness and audience trust as a byproduct. Sharing your expertise and passion for what you do with your audience is a sure way to draw people in and keep them engaged.

Whether you offer business consultation or garden tools, you surely have something to say about it. The possibilities are endless and the only rule is keeping the content relevant to your business and target audience.

3. How blogging can be a game-changer in customer acquisition

Blogging is the most common content creation strategy and a highly recommended acquisition method for any business in any industry. Running a blog allows you to show your expertise and build trust among your readers by exploring various topics.

Creating relevant and quality content continually gives you new opportunities to engage with your audience and for them to engage with you. If they like your content, they might respond to an enticing call to action and convert.

Make sure you have the resources to keep up the production of relevant, well-written, and visually appealing SEO content, as bad blogs cause the opposite effect and deter customers. If done right, blogging is a rewarding customer acquisition method.

4. Utilizing social media marketing to engage and acquire

Social media is great for boosting brand awareness and establishing a brand personality. It’s also a great outlet for republishing content from other acquisition methods (such as blog content), sharing news, and creating rapport with your customers.

The right social media strategy is based on your target audience. What social media do they frequent? You’re unlikely to find Gen Z on Facebook, just as you’re unlikely to find older generations on TikTok. As with all content creation, the possibilities are endless and the only rule is staying relevant to your business and target audience.

5. The Impact of video marketing on today’s audience

Video tends to be the most expensive content type and often sounds scary to small business owners. In truth, good-quality cameras and skilled freelancers have never been more accessible, not to mention the strides AI is making in video production.

The good news is that this content type is highly versatile and sure to shine in any acquisition method. Adding videos to your blog posts and pages will engage readers and give you multiple chances to convert them into customers.

All the convincing you need to make the leap is to see the statistics. More than 90% of potential customers are likely to watch your explainer video and 89% want to see more videos.

Video is quickly becoming the most preferred way to learn about a product or a service:

A good video might be the make-it-or-break-it point of converting, as 82% report being convinced to buy a product simply by seeing a video about it.

6. Boosting acquisition through sponsored content

Sponsored content is a type of promotional media paid for by an advertiser but created and shared by another brand, influencer, or publisher. No matter the channel, sponsored ads can help you generate brand awareness and attract new audiences.

There are different types of sponsored content, such as sponsored search results, product mentions, and paid native advertising. When choosing what to invest in, keep in mind that 80% of internet users prefer content marketing and native advertising, finding it more trustworthy than traditional display ads.

Also consider influencer marketing, as more than 85% of marketers report influencer marketing as effective. Association with reputable influencers and brands via engaging content can also do wonders for your audience’s trust in your brand.

7. Re-engaging potential customers with email retargeting

Collecting emails is one of the best lead-generation investments. It’s direct, long-term, and drives revenue. To create mailing lists, businesses will often offer some type of incentive in return for an address, such as welcome discounts or intriguing gated content.

Once you have an email list, you can start running campaigns and retargeting customers with automated emails. Retargeting is using collected user data to distribute automated highly personalized email content, making customers feel seen and exclusive. For example, a reminder you left items in your cart. Such personal emails keep customers engaged, leading to increased revenue.

How customers interact with your emails also provides invaluable customer acquisition insights. Clicks show what your customers are interested in, while a lack thereof can prompt you to look for new approaches.

8. The power of customer spotlights in building trust

Turning your satisfied customers into promoters is a rewarding strategy proving you’re doing something right. You’re changing people’s lives enough that they feel the need to share. In turn, these happy customers can help you acquire new ones.

Whether through case studies, interviews, reviews, or user-generated content, ask your customers to tell their stories and let them be your best marketers. Potential customers pick up on this, with 90% claiming to have been influenced by positive reviews.

Don’t forget to make it easy for your customers to directly share the content you’ve created. This is called the viral loop, and it’s when your customers share content that leads their followers back to your business.

9. Gated content as a magnet for qualified leads

Gated content is literally behind a gate that needs to be unlocked by the customer. The key usually is providing their email address or signing up for an account. However, the locked content is not just any regular blog post. It’s high-value content requiring considerable effort to create, such as ebooks, white papers, or templates.

Gated content is an important customer acquisition strategy as it can help you get more leads out of your blog and content marketing strategy. It’s also important to make sure the content is not indexed and cannot simply be fetched.

10. Customer care is the driving force of retention and loyalty

Some potential customers enjoy doing their research alone, while others prefer to immediately get in contact. Your sales and customer service teams have the same ability to bring on and keep new customers as your marketing team does.
According to Statista, 83% of consumers report good customer care as the driving force of retention and loyalty. Additionally, it creates repeat customers and makes them more likely to share their positive experiences with others.

Current trends and digital fatigue show a turn towards the human touch provided by these teams. That’s why you need to make sure you never miss an opportunity for your teams to create happy customers. The first step is making sure you have a comprehensive customer care solution in place.

How to effectively measure customer acquisition

There are several customer acquisition metrics to help you keep a finger on the pulse of your business. Analyzing the data will help you uncover opportunities and make better decisions in the future.

Conversion rate

This metric measures the percentage of people who complete a conversion. What is a conversion is entirely up to you and your goals. It might be making a purchase, filling out a form, or signing up for a newsletter. To calculate the conversion rate, simply divide the number of conversions by the number of website visitors and multiply it by a hundred.

Churn rate

It measures the percentage of customers you’ve lost during a set time period. It’s calculated by dividing the number of churned customers by the number of customers at the start of the time, multiplied by a hundred.

Customer lifetime value (CLV)

This metric measures the total revenue a single customer generates throughout their entire journey with you. If the CLV is high, it shows your success at reaching and retaining valuable customers. Low CLV may expose a high churn rate. Calculate it by multiplying the average purchase value by the average purchase frequency by the average customer lifespan.

Click-through rate (CTR)

CTR measures how much your customers click and engage with your content. This will let you know how engaging and relevant your content is for your target audience and if changes need to be made. Calculate it by dividing the number of clicks by number of impressions.

Customer acquisition cost (CAC)

Customer acquisition cost is arguably the most important customer acquisition metric. It lets you know if all of your marketing efforts are worth it. While it’s nice to see conversions, your business may be bleeding money for little reward.

The CAC formula shows the total marketing cost of earning a single new customer over a specific time period. The main role of CAC is to assign real value to your marketing efforts and allow you to measure your return on investment.

Calculating customer acquisition cost: A step-by-step guide

Step 1: Pick a time frame

Narrow down your data by deciding on an exact time frame, for example, quarterly or yearly. If your strategies have undergone great changes, it’s better to separate and compare the periods rather than include them in the same data.

Step 2: Retrieve marketing cost and customer acquisition data

Now that you have the time frame, find out how much you’ve spent on marketing and how many customers you have acquired during the period.

Remember to include employee salaries, the cost of used software, the advertising budget, or any costs associated with content creation in your marketing costs.

Step 3: Calculating CAC

Customer acquisition cost is calculated by dividing marketing costs associated with a specific campaign or strategy by the number of customers acquired from that campaign.

This CAC formula is:

For example, if your Instagram page brings in 50 customers a month and you spend $500 creating content during the same time frame, it would cost you $10 to acquire a customer. Let’s put this example into the formula:

The following graph will help you understand how much your industry peers spend on average on customer acquisition:

Step 4: Compare against other key metrics

The amount calculated in the example above can be both good and bad as CAC only starts to give you a complex idea once it’s compared against other key metrics.

Average purchase value

Take the previous example. Let’s say your customers spend $50 on an average order. This is the average purchase value. Further, let’s say the gross margin of this business is 50%. With the calculated CAC of $10, there’s a profit of $15 on an average order:

Customer lifetime value

Average purchase value compared to CAC can make your efforts seem unprofitable when the opposite is true. This is where the CLV comes in. Lifetime value shows the total average revenue each customer is likely to create. It’s especially important for businesses relying on smaller repeat orders, such as SaaS subscriptions.

You should aim for CLV to be 3 times your CAC. A temporarily lower CLV to CAC ratio can still be healthy. For example, during new campaigns when acquisition rates skyrocketed but CLV didn’t have the time to catch up yet. However, long-term CLV to CAC of 1:1 or lower shows you’re not gaining, or even losing money.

10 More tips to improve your customer acquisition efforts

There’s always space for improvements in your customer acquisition pipeline. Here are some tips:

• Work on minimizing spending: Always look for ways to reduce spending. Is there a piece of content you can repurpose for other channels? Are there any processes you can automatize?
• Don’t put all your eggs in one basket: In marketing, this old saying works tenfold. The more methods you can use, the more potential customers you can reach. Still, only use the methods suitable for your business and audience instead of throwing money at lost causes.
• Make your strategy future-proof: Make sure you can keep up with the investments and goals you’ve set. Focus on sustainable strategies, such as producing high-quality SEO content that can generate new leads for years to come.
• Make your strategy flexible: While you want to aim for sustainable strategies, always leave wiggle room for new trends, as marketing is always changing.
• Develop partnerships: Collaborate with complementary brands and influencers.
• Work towards word-of-mouth marketing: 81% of consumers trust the advice of family and friends over businesses. By providing your customers with excellent service, you’re making them want to share you with their friends.
• Build brand voice and personality: Customers will not understand what you sell and what your brand stands for if you yourself aren’t sure or keep changing it. Clearly define your mission, values, and tone of voice to make your brand more human.
• Create buyer personas: defining your target audience via buyer personas will help you stay mindful of their motivations, needs, and habits so that you can respond accordingly.
• User-friendly product design: Ensure your product is well-designed and user-friendly to create a positive customer impression. Don’t forget mobile optimization.
• Clear CTAs: Help customers move through the stages by including clear and compelling calls to action. Do you have a low conversion rate? Try A/B testing different copywriting versions.

Tools that revolutionize customer acquisition

You don’t have to brave the ins and outs of customer acquisition alone. If you want to maximize acquisition and minimize costs, here are the main pieces of software that shouldn’t be missing from your toolbox.

Customer support tools

Customers respond well to 24/7 AI chatbots and even better to prompt, qualified, and personable care from support and sales staff. Adding that personal touch and conversing with a potential customer can be the make-it-or-break-it moment that leaves a lasting impression. Helpdesk tools such as LiveAgent can centralize and streamline all your client communication.

Customer relationship management tools (CRM)

A CRM platform is integral to any user acquisition strategy. This system stores information about customers, their purchasing habits, preferences, and feedback while also providing automation tools. In tools such as Hubspot’s marketing and sales hubs, all of your teams can access, and use the data to improve customer service, predict future trends, and target marketing efforts more effectively.

Website analytics and customer behavior tools

Using the free Google Analytics or its alternatives will allow you to track traffic and events. This is how you can get valuable data, such as the conversion and churn rates.

If you’d like to go deeper and understand how customers behave on your website, you should consider heat maps and session recordings from Hotjar. These will help uncover where users get stuck and churn, allowing you to take action and make the customer journey smoother.

SEO tools

As we’ve already covered, SEO optimization is an insanely popular and cost-effective acquisition method with a long shelf life. There are many robust solutions to integrate into your content management system and help you right as you’re creating the content. URLsLab will guide WordPress users through the entire optimization process.

Emailing and landing page tools

The future of customer acquisition is personalized. Emailing tools such as Mailchimp know it well. These allow you to set email automation for behavior triggers, making sure you can always promptly resonate with customers without excessive effort.

Social media management tools

Tools like Kontentino or Buffer let you create and plan content for any social media platform. These tools use a single dashboard to guide you through the best practices for each platform while also allowing for future post-scheduling.

Referral and affiliate tools

Setting up and measuring the success of external help from customer referrals and affiliate programs can get messy. That’s why if you’re going to engage in these strategies, you need a solution to stay on top and measure your efforts. Post Affiliate Pro will help you create, manage, and automate affiliate marketing programs.

How to reduce e-commerce customer acquisition costs

There’s always something to learn and improve upon in your client acquisition efforts. Here are some tips on lowering costs while uplifting your efforts and learning more about your clients.

Importance of A/B Testing in marketing campaigns

A/B testing in marketing is splitting a campaign into various versions, measuring which version works the best, and finding out why. Marketing campaigns can be shots in the dark. Sometimes merely rewriting or moving a CTA can have a great impact. A/B testing will give you valuable knowledge and save you from spending loads on ineffective campaigns.

The benefits of retargeting website visitors

Have you ever left an online shop just to see the same items in your social media feeds just minutes later? Your browser picks up a cookie that signals retargeting platforms, such as Google or Facebook ads, to provide tailored offers based on your behavior. If you’re signed in, the shop may email you directly, reminding you what items you have looked at.

There’s also email retargeting to re-engage existing customers. You might’ve received a birthday discount just to suddenly find yourself looking through their offer to see if the discount might come in handy. The customer feels the messages are personal and exclusive while in reality, setting up such an automated offer is easy for the business.

How chatbots can be a cost-efficient lead generation tool

Lead-generation chatbots use a conversational approach to gather customer information, guide them through the buying process, actively engage with prospects, and keep them from leaving your website unconverted. Furthermore, analyzing chatbot data can bring valuable insights about your audience, their needs, and motivations. Most importantly, thanks to the 24/7 service, chatbots ensure you never miss a lead.

The power of marketing automation in reducing acquisition costs

Marketing automation eliminates repetitive monotonous tasks within email marketing, social media posting, and even ad campaigns – not just in the name of efficiency, but also to provide a personalized experience.

Each action your prospects take means more data for your marketing strategy. As helpful as this information is, manually tracking it is impossible. Marketing automation software helps businesses collect inputs across multiple channels. This allows them to deeply understand their customers’ needs and deliver the right content at the right time.

Importance of regular customer acquisition strategy review

Take the time to structure your acquisition plan and see what each method is costing you. Where could you cut back on extra marketing spending? Costs for specific channels can rise over time, and you can always lower CAC by finding newer and cheaper channels to invest in.

The future of customer acquisition

A shift towards more authentic, personalized, and technologically integrated customer acquisition strategies is expected. Customers will expect a frictionless journey with a uniquely human touch, especially in communication and content.

AI will be crucial in analysis and data-based prediction, leading to better personalized messaging, tailored experiences, and advanced customer profiles. For example, group segmentation allows for dynamic website content based on user preferences or personalized ads on social media platforms.

Predictive lead scoring based on customer data will help businesses decide where to allocate resources, which leads to prioritize for a higher chance at conversion, or predicting customers at risk of churning.

Conclusion

Acquisition of new customers never gets easy but by understanding how it works and what strategies you can employ, you’ll become better equipped to take on the challenge. Never forget that it’s a dynamic ongoing process. Not everything will work for you, so it’s important to keep testing and looking for new ways to engage customers.

Research shows that growth isn’t just about your marketing and sales teams. As we’ve covered, word-of-mouth marketing, influencer marketing, and customer spotlights are currently driving the market. In the vast melting pot of options and advertisements, we increasingly look towards reviews, testimonials, influencers, and most importantly friends and family, to guide us through the decision process.

That’s why happy customers will do much more for your company’s growth than any paid advertisement could, and most importantly – they will stay to create more revenue and draw in new customers. If you want to claim your spot for the future, get comprehensive ticketing and customer care software, to ensure you never miss a lead. Consider giving LiveAgent a try with the 30-day free trial.