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10 Successful Customer Acquisition Strategy Examples – Case Studies and Best Practices

Customer acquisition strategy examples: 10 effective approaches to boost your business.

Welcome to our comprehensive guide on successful customer acquisition strategies . In today’s competitive business landscape, acquiring new customers is crucial for sustaining growth and achieving long-term success. In this blog post, we will explore ten effective customer acquisition strategies that are currently yielding impressive results for various businesses. From influencer marketing to AI integration, we will cover a range of approaches to help you choose the best strategies for your unique business goals.

Customer Acquisition Strategies Based on Target Audience

Strategy 1: influencer marketing.

Influencer marketing has become a powerful tool for capturing the attention of your target audience through partnerships with influential individuals in your industry. A prime example of successful influencer marketing is the collaboration between Brand X and popular blogger Y.

Case Study: Brand X partnering with popular blogger Y

Brand X, a skincare company, teamed up with renowned beauty blogger Y to promote their new range of products. Through Y’s recommendation and enthusiastic reviews, Brand X saw a significant increase in website traffic, brand awareness, and sales.

Best practices for influencer marketing campaigns:

• Identify relevant influencers who have a genuine connection with your target audience.
• Create personalized collaboration proposals that highlight mutually beneficial outcomes.
• Provide clear guidelines and encourage influencers to showcase your product/service authentically.
• Monitor and analyze the results of your influencer campaigns to optimize future partnerships.

Strategy 2: Content Marketing

Utilizing compelling content is an effective way to attract and engage potential customers. Company Z’s content marketing campaign serves as an inspiring example.

Case Study: Company Z’s successful content marketing campaign

Company Z, a digital marketing agency, created a series of informative blog posts and videos that addressed their target audience’s pain points. Through compelling storytelling and valuable insights, they established themselves as industry authorities, attracting relevant leads and converting them into long-term clients.

Best practices for content marketing to acquire customers:

• Research your target audience’s interests and challenges to create highly relevant content.
• Utilize a mix of formats, such as blog posts, videos, infographics, and podcasts, to cater to various preferences.
• Optimize your content for search engines to increase organic visibility and attract qualified traffic.
• Promote your content across multiple platforms and nurture leads with tailored email marketing campaigns.

Strategy 3: Social Media Advertising

Social media platforms offer immense potential for reaching and engaging a wide audience. Brand A’s successful social media advertising strategies demonstrate how to capitalize on these opportunities.

Case Study: Brand A leveraging social media platforms

Brand A, a fitness apparel brand, utilized targeted ads on Facebook and Instagram to showcase their products to fitness enthusiasts. By segmenting their audience based on demographics and interests, they effectively reached potential customers who were most likely to resonate with their brand, resulting in increased brand visibility and sales.

Best practices for effective social media advertising:

• Define clear objectives and target specific customer segments to optimize ad relevance.
• Create appealing visuals and compelling ad copy that conveys your unique value proposition.
• Utilize retargeting to reach people who have shown interest in your brand or visited your website.
• Regularly analyze ad performance and adjust your targeting, messaging, and budget accordingly.

Customer Acquisition Strategies Based on Product or Service

Strategy 4: free trials and freemium models.

Offering free trials or freemium models can be an effective way to introduce your product or service to potential customers. Company B’s successful freemium model demonstrates this approach.

Case Study: Company B’s successful freemium model

Company B, a project management software provider, offered a basic version of their software for free, allowing users to experience its benefits firsthand. This strategy not only drove initial customer acquisition but also led to a significant increase in paid subscriptions as users recognized the value of the premium features.

Best practices for implementing free trials and freemium models:

• Define clear limitations and communicate the value of the premium version to encourage upgrades.
• Implement a user-friendly onboarding process to help users quickly understand the product’s value.
• Collect user feedback during the trial period to identify pain points and improve the product.
• Establish communication channels to guide trial users and provide support when needed.

Strategy 5: Referral Programs

Referral programs have proven to be an effective customer acquisition strategy, leveraging the power of word-of-mouth marketing. Brand C’s referral program success story illustrates the potential of this approach.

Case Study: Brand C’s referral program success story

Brand C, an e-commerce company, implemented a referral program that rewarded customers with discounts or exclusive perks for referring friends. This incentivized customers to recommend the brand to others, resulting in a continuous stream of new customers at a low acquisition cost.

Best practices for designing and implementing referral programs:

• Make the referral process simple and rewarding for both the referrer and the new customer.
• Provide attractive incentives that align with your target audience’s interests and preferences.
• Promote your referral program through various channels, including email, social media, and your website.
• Regularly acknowledge and reward customers who refer new business to foster loyalty and encourage continued referrals.

Strategy 6: Email Marketing

Email marketing remains a powerful tool for capturing and nurturing leads. Company D’s effective email marketing campaigns serve as an excellent example of utilizing this strategy.

Case Study: Company D’s effective email marketing campaigns

Company D, an online fashion retailer, implemented personalized email campaigns based on customer preferences and browsing history. By tailoring recommendations and offering exclusive discounts, they successfully re-engaged inactive customers and transformed them into loyal, repeat purchasers.

Best practices for capturing and retaining customers through email marketing:

• Segment your email list based on customer preferences, demographics, or lifecycle stage.
• Create visually appealing and mobile-responsive email templates to enhance engagement.
• Utilize personalized recommendations, special offers, and loyalty rewards to boost conversion rates.
• Regularly analyze email performance metrics and conduct A/B testing to optimize your strategies.

Customer Acquisition Strategies Based on Industry or Niche

Strategy 7: event marketing.

Events provide invaluable opportunities for businesses to connect with their target audience. Brand E’s event marketing success story demonstrates the potential of this customer acquisition strategy.

Case Study: Brand E’s event marketing success

Brand E, a pet food company, organized a pet-friendly outdoor festival where they showcased new products, offered samples, and engaged with pet owners. The event resulted in a significant increase in brand visibility, direct sales, and valuable customer connections.

Best practices for leveraging events to acquire customers:

• Identify relevant industry-specific events or create your own targeted events.
• Create engaging experiences, such as interactive displays, product demonstrations, or educational workshops.
• Utilize social media and email marketing to promote your event and draw attendees.
• Collect contact information and follow up with event attendees to nurture relationships.

Strategy 8: Partnerships and Collaborations

Strategic partnerships can help businesses extend their reach and tap into new customer bases. Company F’s success with forming partnerships showcases the potential of this customer acquisition strategy.

Case Study: Company F’s strategic partnerships

Company F, a subscription box service, partnered with complementary brands to offer joint promotions and exclusive discounts. By leveraging each partner’s customer base and cross-promoting their products, they successfully acquired new customers and strengthened brand loyalty among existing customers.

Best practices for forming successful partnerships and collaborations:

• Identify compatible brands or influencers with similar target audiences.
• Articulate clear mutual benefits and goals to establish a win-win partnership.
• Create co-branded campaigns or exclusive offers that entice customers to engage with both brands.
• Regularly evaluate and optimize your partnerships to ensure maximum effectiveness.

Strategy 9: Local SEO and Online Directories

For businesses with a physical presence or a strong local customer base, optimizing local SEO and utilizing online directories can be highly valuable. Brand G’s effective local SEO efforts exemplify this approach.

Case Study: Brand G’s effective local SEO efforts

Brand G, a local bakery, focused on optimizing their website for local keywords and directories. They ensured consistent NAP (name, address, phone number) information across all platforms and obtained positive customer reviews. As a result, they secured top rankings in local search results, gaining increased visibility and attracting local customers.

Best practices for optimizing local SEO and utilizing online directories:

• Create informative and localized content on your website, incorporating location-based keywords.
• Optimize your Google My Business profile, including accurate business information and customer reviews.
• Submit your business details to well-known online directories, such as Yelp and Yellow Pages.
• Encourage satisfied customers to leave positive reviews and respond promptly to any feedback.

Customer Acquisition Strategies Based on Technology and Innovation

Strategy 10: ai and chatbots.

Emerging technologies, such as AI and chatbots, offer businesses new avenues to engage with customers and streamline the acquisition process. Company H’s successful implementation of chatbots demonstrates the effectiveness of this strategy.

Case Study: Company H’s successful implementation of chatbots

Company H, a telecommunications company, integrated chatbots into their customer support system. AI-powered chatbots efficiently handled initial customer queries, provided personalized recommendations, and guided customers through the purchase process. This resulted in improved customer satisfaction and increased conversions.

Best practices for integrating AI and chatbots to acquire customers:

• Understand your customers’ pain points and tailor chatbot interactions to address their specific needs.
• Ensure seamless integration with existing customer support systems to provide consistent assistance.
• Continuously improve chatbot responses by analyzing customer interactions and making necessary updates.
• Offer human fallback options for complex inquiries that require human intervention.

In this comprehensive guide, we have explored ten successful customer acquisition strategies, categorized based on target audience, product or service, industry or niche, as well as technology and innovation. Remember, each business is unique, so choose the strategies that align with your goals, target audience, and industry. By implementing the most suitable customer acquisition strategies, you can effectively expand your customer base, increase brand visibility, and drive sustainable growth.

Take action now and initiate the implementation of these strategies to propel your business forward!

Related articles:

• The Ultimate Guide to Developing an Effective Acquisition Strategy in Marketing
• Mastering Acquisition Strategy – A Clear Definition and Best Practices
• Understanding Acquisition in Marketing – Exploring its Definition and Importance
• Unlocking Growth – How a Customer Acquisition Consultant Can Skyrocket Your Business

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An exhaustive guide to customer acquisition strategy (with 13 examples)

Anyone who's lived in the high desert knows that weeds are no joke out here. Even though I'm a die-hard DIYer, I recently succumbed to hiring a neighborhood kid—I'll call him Dave—to rid my backyard of them. 

When Dave posted flyers all over the neighborhood at the start of spring, I took the opportunity. The negotiable rate, mission to save for college, and cheery headshot complete with gardening tools and disposable surgical mask promised this would be safe, quality work for a good cause—all at value pricing.

What this industrious adolescent understood intuitively is the core of good business: a strong customer acquisition strategy that identifies a market, an opportunity, and a product tailored to both. Here's how to take a page from Dave's book and build an effective game plan for bringing in a sustainable stream of customers.

Table of contents:

What is customer acquisition?

Customer acquisition is the process of gaining prospective customers, nurturing them into leads, and then converting them into buyers. This flow, known as the customer acquisition funnel, has five phases: awareness , interest , consideration , conversion , and retention . 

Benefits of building a strong customer acquisition strategy

Customer acquisition doesn't just happen on its own—the "if you build it, they will come" approach only worked in Field of Dreams because Kevin Costner had the help of baseball-playing ghosts. (I haven't seen this movie in over a decade, so don't fact-check me.) 

In the real world, you need to proactively bring in leads. This kind of intention can bring benefits like:

Improved ROI: Targeted campaigns for customer acquisition allow you to focus on the campaigns, markets, and channels with the highest value and conversion rates. 

Resource optimization: A defined strategy allows you to budget resources for predetermined tasks and campaigns. Over time, you'll see which acquisition channels are the most effective, allowing you to cut resources from the ones that aren't working.

Measurable progress: Because customer acquisition sets clear values on leads and conversions by corresponding directly to sales information, you can readily put real dollar amounts on successes and failures.

Visibility: As you nurture leads through the acquisition process, you can see where you're losing them in real time.

Sustainable growth: As you identify the acquisition strategies that work best, you can replicate them across products to steadily increase ROI.

Lower churn rates: Once you effectively and systematically acquire customers, you can perfect retention efforts. This allows you to proactively turn one-time customers into return customers—not just hope it happens on its own.

Visibility: The data you gain from monitoring customer acquisition campaigns shows you a massive amount of detail about your market and customers' buying behaviors.

What is customer acquisition marketing?

Customer acquisition marketing refers to marketing tactics that are intentionally geared toward converting current leads into customers. This differs from other forms of marketing because it involves strategically appealing to targeted potential customers with the end goal of progressing them through a predetermined acquisition funnel.

What is the customer acquisition funnel?

The customer acquisition funnel refers to the general set of phases a potential buyer progresses through, from first impression through conversion. Another way of visualizing the CX lifecycle, this customer journey framework caters more to the business perspective of proactive lead targeting. 

If you picture an actual funnel, those phases can be broken down into five milestones, going from the wide opening down to the skinny spout:

Awareness: The first phase in customer acquisition is building awareness for your brand, product, or service. This can be done through traditional marketing and publicity campaigns to build a preliminary pool of potential leads.

Interest: Not everyone who knows about your offering will find it relevant or be in a position to think about buying it. Those who do find it relevant to their needs or desires will become interested, making them leads.

Consideration: Leads with an interest in your offering who are theoretically ready and able to buy then move into the consideration phase. There'll be comparatively fewer leads here than at the start of the funnel, but at this point, they're nearly ready to purchase.

Conversion: Those who follow through with the purchase convert from leads into customers. This is obviously the primary goal, but it's still not the ideal end of their journey.

Retention: Satisfied buyers who stay interested in your products or services can then be retained so they continue buying from you. 

Here's what that funnel looks like for Dave and his yard services:

Dave builds awareness for his services by distributing flyers around a neighborhood primarily made up of middle-income homeowners.

By targeting homeowners with yards as the temperatures rise along with the grass and weeds, Dave generates interest .

As the weeds continue growing, the days get longer, and the mosquitoes start multiplying, interested leads start considering Dave's yard services.

Leads who get a quote convert when they pay Dave to come clean up their yards.

Dave retains customers when they see their weeds coming back during monsoon season when it's 101 degrees.

How to choose your customer acquisition channels

To acquire new customers, you need to be able to reach them on the right channels. This helps you define your market, refine your outreach strategies, and meet potential customers where they are. 

Those channels can be broken down into two main types.

Digital channels: These will probably apply to just about every major business, while digital-first offerings like SaaS or cloud products may exclusively operate here. Common examples of these channels include:

Social media

Influencers

Newsletters

Pay-per-click (PPC)

Traditional channels: While these can seem most applicable to physical or geographically-specific offerings like automobiles or yard services, many digital products can still gain a lot of traction from non-digital channels like:

Pop-up shops

Trade shows

Guerilla marketing

Physical advertising

Partnerships

How do you know which ones are right for you and your potential customers? Start by following these four steps.

1. Audit your current channels

As someone wise (probably) once said, you can't know where you're going until you see where you're standing. In this case, that means taking stock of all your current channels.

Once you've listed your channels, compile performance metrics, so you can evaluate how active you are on these channels and how successful your efforts have been. Without getting too granular, here are some common metrics you can start with:

Conversions and conversion rates

Clicks and click-through rates

Impressions

Time on page/site

Operational expenses

Obviously, the metrics you use will vary widely by channel. The main thing is to get a holistic view of your current acquisition channels, so you can see where your resources are and aren't going.

2. Define your market

Knowing how to reach your market means first knowing who's part of it. Customer demographics and buying habits can have a huge influence on where they spend their time and attention, which in turn can tell you where they're likely to interact with businesses and find products. 

Again, this is a very nuanced step in the process that can take a lot of time and involve multiple teams. Depending on where your product is in the sales process, your marketing, sales, and product teams may have already done much of this work. These processes can help you define your market:

Find public demographic data from government agencies.

Like other steps in this process, this is a cross-functional (and potentially time-consuming) one. But it's well worth it to know everything you can about who you're trying to reach.

3. Identify which channels they use

It's probably not a great strategy to just start blasting your Twitter/X feed with promotional content because it's the only social media outlet you use. Rather than risk shouting into the void, you should be sure that there are real, engaged customers on the other end of it.

This is where your research in the last step comes into play. For example, a SaaS company may find that the busy, mid-career executive decision-makers they market to get recommendations from industry leaders on LinkedIn or conference panels. Meanwhile, a provider of trendy, nontoxic kitchenware should know that the stay-at-home middle-income parents they sell to get a lot of their cooking tips from influencers on TikTok and YouTube.

Data about which channels your potential customers use should come from market research, but here are some general tips on how you can find out which ones are important for reaching them:

Monitor where your competitors dedicate social media, advertising, and promotional resources.

Conduct customer surveys.

Search relevant hashtags across social media outlets.

Explore your own website analytics to see which sources drive your traffic.

Read through Reddit threads related to your industry or competitors to see which channels they commonly mention.

Use keyword research to see which channels are brought up alongside search terms that are relevant to your product.

Look up Google Trends data on key terms related to your product and industry to see what potential customers are interested in.

Remember that trends in channel usage can change quickly. Reports, anecdotal experience, and campaigns that are just a few years old could be completely out of date today. If you can identify trends in your market's behavior and plan around them before your competitors catch on, you could create a major competitive advantage. 

4. Decide which channels are viable for you

Once you know who your market is and which channels they actively look to for product inspiration, you can combine each of the three steps above to find out how to adjust your efforts. Ideally, your Venn diagram will show that your market's channels overlap with many of yours. Even if it doesn't, the information should be illuminating about where you should look to grow your presence.

Keep in mind that this data doesn't have to be 100% prescriptive. For example, it may not make sense for a virtual legal services upstart to try to compete with giant law firms' localized network advertising campaigns since they have no name recognition or physical offices. Meanwhile, a growing funeral services provider might find that their competitors aren't active on Instagram, but creating tastefully funny Reels aligns with their unique angle of bringing levity to their market of older millennials with aging parents.

Deciding on channels is one part data, one part art. Your research from the previous steps should give you a real idea of what the norm is for your market and industry. That data may also point to trends that haven't actualized yet; now that we all accept TikTok's explosive growth, we can see the writing was on the walls in 2019 when people had an insatiable appetite for short, candid, personal video clips and synchronized dancing.

Having a baseline about what your potential customers expect can't tell you what makes sense for your product, brand, growth goals, and unique selling point. You'll also need to consider factors like these before you dive blindly into every channel your competitors and market use: 

Marketing budget

Level of brand awareness or industry authority

Marketing personnel and bandwidth

Alignment with broader company goals or timelines

Time to value for efforts in each specific channel

Cost to keep up with established competitors

Scalability

Any potential regulatory or compliance obstacles

Remember that any channel will take time and planning to see through to success, but the last thing you want to do is waste valuable resources on channels that don't come to fruition soon enough. Before you make any decisions, set specific goals for each channel so you can measure success over time and be sure you've made the right choices.

13 customer acquisition strategy examples

You know your market, you've got your channels, and you're ready to start moving all those customers along the acquisition funnel—now it's time to plan your campaigns. 

Consider these customer acquisition strategies from across channel types to find and convert new leads.

1. Content marketing

Case in point: you're looking at it. 

2. Search engine optimization (SEO)

For many businesses, their website is the foundation of the customer acquisition journey. It's where people become leads and where leads convert to customers. SEO thus goes hand in hand with many other customer acquisition strategies—especially content marketing.

If you search for your general product or service type, chances are the first result in the SERP has top-notch SEO execution. For example, when I search Google for "basketball shoes," it's no surprise that Nike.com's basketball shoes page pops up first. 

This is a site with a ton of products, images, and pages, and it still loads before I can say "Air Jordan XXXVIII Fundamental" three times fast. The URL of its Mens Basketball Shoes page doesn't have a ton of unnecessary categories or subdomains, the top nav has six simple options, and there are no distracting pop-ups or fancy effects detracting from my user experience. The title tag and description are concise and clearly optimized for the keyword "men's basketball shoes" without getting all keyword stuffy.

At the bottom of the page, below all the beautiful sneakers, there's even a "Related Stories" section to keep sneakerheads moving through the website. Featuring product launch details, news, and buying guides like "The Top 5 Nike Gifts for Teen Boys," its (also clearly keyword-optimized) content pages support its shop pages by directing traffic back to relevant product lines. By keeping its SEO game as tight and clean as a pair of brand-new Jordans, Nike can draw general, brand-agnostic customers to its website before competitors have a chance to do the same.

3. Social advertising

The strength of social media advertising is precision. Once you know which platforms your market uses, you can zero in on exactly who you want to reach based on demographic info like age, interests, location, and even online behavior. If you sell automotive accessories, you can home in on users who like cars. If you sell image editing software, you can display your ad only to people listed as graphic designers.

To illustrate, let's get meta: LinkedIn doing LinkedIn advertising on LinkedIn. 

The link goes to a LinkedIn Business Solutions landing page for the B2BUILD campaign, where users-turned-leads are walked through the advertising hub. On the back end, LinkedIn's marketing team can see how users who land on the page interact with it to find where they're losing leads, the rate at which leads convert into customers, and data for calculating the return on their advertising investment.

4. Pay-per-click (PPC) search advertising

Like social media advertising, PPC advertising has the benefit of being able to target leads. You also only pay when a potential lead actually becomes a real lead by clicking your ad. Within your ad hub, you can see how your ads are ranking compared to competitors', how many total impressions they're getting, and how often they're getting clicks. By setting up dedicated landing pages to link these ads to, you can even track the exact conversion rates of leads who arrive via your PPC ad.

With this level of analytical detail, you get real proof of how effectively you're both acquiring leads and converting them into customers.

To illustrate, here's how Article stuck out for the search term "leather couch":

Visually, this was the first result I noticed in the carousel of PPC competitors. In half a second, I see an attractive couch that stands out, I know what it costs, and I know buyers like it, which is essential since I can't give it a nap test first.

5. Referral programs

Generations of sales teams have used referral programs to acquire customers, and there's a reason they're still in use: they work. The beauty of a referral program is that  it taps into the resource of existing satisfied customers, setting up a quid pro quo for them to bring in new customers or users.

The specific incentives depend on what you're offering, but typically come in the form of one or more of these:

Discount codes

Account deposits

Free trials

Free subscription periods

Promotional points

Free services 

Free upgrades

A prime example is fee-free stock trading platform Robinhood, which offers current users a free stock for referring new users, who also get a free stock. 

In the meantime, Robinhood benefits because it's acquired more vested users who are now depositing money into their accounts to buy the next big stock du jour. And since stocks are typically long-term investments, it hooks long-term users, who have more time to continue depositing and referring more new users. It's technically a win-win, but I get the feeling Robinhood wins more than most users. 

6. Partnerships

Home lifestyle brand Williams Sonoma has been very effective in choosing partnerships, especially in its family brands dedicated to kids. One such partnership is West Elm Kids and National Geographic. 

This partnership helps National Geographic expand into a sector (home goods) it has no access to while giving several benefits to West Elm Kids, like promotion of its commitment to sustainability, which aligns with NatGeo's audience's interest in the environment.

Anyone who's ever made a collage in elementary school knows NatGeo has long been a fixture of American public education. Meanwhile, anyone who's ever bought toys, linens, and decor for kids knows that anything considered remotely educational gets a bump in parent approval ratings. A smart partnership (smartnership?) like this gives businesses like West Elm Kids a new avenue for acquiring customers that aligns with and expands its current market.

7. Webinars and workshops

Nobody knows your industry and product like you do. Sharing your knowledge with your market through free live webinars and workshops allows you to:

Home in on people in your market who are already hypothetically interested in your offering (who are now also pre-educated about its benefits)

Differentiate from competitors

Build brand recognition by making a lasting impression

Collect marketing data like contact information

Qualify potential leads with more information

Position your offering as a solution to common problems your market faces

Learn more about people in your market by interacting with them

Piggy-back with additional research like surveys or interviews

By educating the public on product features and broader subjects like product planning, workflow management, consumer behavior, and digital marketing through webinars, Airtable can give thought leadership on in-demand issues and then tie in its own product seamlessly. This allows the company to acquire high-value leads that are much more likely to become customers.

8. Influencer marketing

Scrolling TikTok, Instagram, or YouTube for literally any amount of time shows what makes influencer marketing so potent: even if these loosely veiled product placements littering your feed are a form of paid advertising, they still feel like carefully vetted recommendations from real, down-to-earth, not incentivized human beings. 

From a marketing point of view, this is hugely valuable. This is a genuine word-of-mouth product promotion you can pay for. While high-level influencers with millions of followers may charge for their services, smaller influencers will make videos for the cost of one free product or software license. Even amateur influencers' reviews could be read or seen by thousands of people, which is still a really strong return on a very minimal spend. 

Here's what I'm talking about.

@coffeelicker No more looking like a turtle 🐢. Check it out at brevite.co/coffeelicker — #ad #camerabag #brevite #photography #filmmaking #cameragear @brevite ♬ original sound - Herman Huang

Herman Huang (@coffeelicker) is a creator whose content focuses on videography. This makes him a perfect paid partner (note the designation below the caption) for Brevitē, manufacturer of the multifunctional camera bag featured in the video pictured above. This video is nestled into his library of editing tips, software guides, and craft tutorials. As you're scrolling through original, non-sponsored content, it feels like just another original, non-sponsored video that happens to recommend a product.

With just over 7,000 followers, Herman was probably a relatively low-cost partner compared to celebrities or career influencers. However, he was a very targeted one with a dedicated following of exactly the kinds of people who would buy a Brevitē bag. Reaching out to creators like him (which the company's feed shows me it does often) allows Brevitē to reach highly targeted audiences with user-created content.

9. Email marketing

Going (formerly Scott's Cheap Flights) is a master of this—in fact, its business model is centered around email.

Going sends its free users like me cheap flight deals from all around the world. These are flights I wouldn't necessarily think to look up on my own, so it's fun to see them appear in my inbox periodically, so I can suddenly feel like I have the option to take an impromptu trip to Puerto Rico. 

These emails are also vehicles for Going to sell its premium service—which, if I wanted a more bespoke cheap travel recommendation experience, I may be willing to pony up for. It also allows the company to advertise sponsors like Babbel, a language-learning app that's an obvious choice for an audience of international travelers.

10. Free trials or freemium models

I don't know who said it or where I heard it, but there's an adage I think about often: if something is free, you're the product. Free trials prove that to be true for sales teams.

But the saying is a little harsh in its cynicism. By offering potential customers a free trial of your product or a stripped-down freemium model, you do give them real value—either the free offering is all they need and they get to save money on something they would have paid for, or they get to test drive it before they buy. And from a sales perspective, both outcomes can be valuable.

The cable replacement streaming service Fubo is a prime example. 

When I wanted to watch the Oscars this year, I realized the only way to watch it was to have a live TV subscription. The red carpet had already started, and I was running out of options because I hadn't had access to cable in about a decade. It turned out Fubo was one of the only streaming options with a free seven-day trial, which I started up just in time to catch Pedro Pascal being charming in a double-breasted Zegna suit. 

11. Gated resources

Once you have these contact details, you can proceed with other customer acquisition campaigns, like email campaigns containing free trials, discounts, product advertisements, and other offerings.

Industry research provider IBISWorld has built its whole business on this model. 

Good market research is hard to come by, and IBISWorld has it in spades—if you're willing to pay for it. However, interested users can start with a free trial report from an industry of their choice. It may not include the exact information they're looking for, but it gives a clear picture of the quality of data customers can expect. 

To get that free sample report, you have to sign up using your work email and company name. (This no doubt contributes in some way to more proprietary data.) Once you do that, you may get your sample report and move on with your life, but IBISWorld can continue marketing its reports to you for as long as you keep them out of your junk folder. So even if you don't buy the full version of that report, you'll be more likely to come back to the company the next time you need premium industry data.

12. Customer reviews and testimonials

To encourage reviews, it can be worthwhile to incentivize customers with perks like discount codes or freebies. I know from experience because Rainpoint, a company I bought a watering timer from, told me it'd send me a free upgraded timer if I left a review.

Did I like my watering timer enough to leave it five stars? Yes. Would I have left a review if I didn't have the prospect of getting another free one for doing it? No. What RainPoint understood is that authentic reviews from satisfied customers are worth their weight in digital outdoor faucet apparatuses. 

If I hated the timer, obviously a free one wouldn't have changed my mind, so I wouldn't have left a dishonest five-star review. RainPoint's hope is that for the production cost of a handful of products, it can get enough positive reviews to beat competitors in Amazon's algorithm and sell to new customers on the strength of an impressive near-five-star product rating over thousands of reviews. It also makes past buyers like me more likely to buy more of its products (which I have).

13. Social engagement

A theme that's popped up among many of these strategies is the value of authentic end-user experiences, and social engagement—as opposed to paid social media advertisements—is another way to promote that. Because, when it's done well, social media breaks down the barrier between customers and corporations. 

As content channels, your social media feeds can be outlets for promoting thought leadership while also driving traffic to your blog or directly to your product pages. They can also serve as branding opportunities to grow your reach to new customers if your channels provide real value in the form of useful information, discount codes, giveaways, updates on your products, or pure entertainment.

Here's Beyond Meat illustrating what I mean.

Because this is what heroes do: goes on to inconvenience a minimum wage grocery store employee https://t.co/V6u0AS8a5A — Beyond Meat (@BeyondMeat) May 15, 2023

Beyond Meat stays top of mind to its customers while coming across as personable, empathetic, and aligned with their own values, which makes those potential customers want to continue buying its products. Followers may also feel compelled to share its funny tweets on their own feeds, expanding the potential customer base further.

Measure success by calculating customer acquisition cost

Once you've picked your customer acquisition channels and executed your customer acquisition strategies on those channels, there's still more you can do. The key to effective customer acquisition is measuring the success of your campaigns in real dollar amounts.

To do that, you can repurpose a standardized marketing equation that breaks down to spend over acquisitions . This gives you the cost per acquisition.

Let's say your expenses on social media combine a freelance designer's pay, your copywriter's salary (adjusted for the time they took to work on the campaign), and relevant monthly software fees, coming out to $500 for a four-week campaign. The campaign funnels through a dedicated product code, which is used 50 times . That means each customer costs you $10 to acquire .

Now, let's say the average spend through that product code is $100. That means you've generated $10 per $1 of marketing spend, while the total campaign generated $5,000 on a $500 investment.

Whether that's successful on your terms depends on your goals for the campaign. With real dollar values in hand, you can decide whether this approach is worth doubling down on later, abandoning, or tweaking before you try again.

How to keep customer acquisition costs down

To improve acquisition efficiency, you can either increase conversion rates, lower the cost per conversion, or increase the average value of each conversion. Here are a few common strategies for making one or more of the above happen.

A/B testing: Testing minor changes to marketing elements like copy, images, keyword focus, message timing, email layout, and acquisition channels allows you to focus efforts on what works best for your customers.

After new customer acquisition comes retention

Automate your customer acquisition strategies.

Customer acquisition is a moving target. There are always ways to improve lead volume, conversion rates, and conversion value. And what works for one product at one time may not work for a different product or even for the same product by this time next year. Even when you're satisfied, you have to stay fluid with your market.

To give you the bandwidth to focus on those strategies, you can let automation and AI handle the work that's meant for computers. Here are some guides to automating various customer acquisition channels:

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Bryce Emley

Currently based in Albuquerque, NM, Bryce Emley holds an MFA in Creative Writing from NC State and nearly a decade of writing and editing experience. His work has been published in magazines including The Atlantic, Boston Review, Salon, and Modern Farmer and has received a regional Emmy and awards from venues including Narrative, Wesleyan University, the Edward F. Albee Foundation, and the Pablo Neruda Prize. When he isn’t writing content, poetry, or creative nonfiction, he enjoys traveling, baking, playing music, reliving his barista days in his own kitchen, camping, and being bad at carpentry.

• Sales & business development

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High Value Customer Acquisition Case Study [With Dylan’s Candy Bar]

How dylan’s achieved greater engagement, loyalty & profits, sweet results.

Executive Summary

• In this Case Study, we’ll cover how Dylan’s implemented BuyerGenomics’ Predictive Marketing Automation (PMA) platform to solve problems that traditionally takes months, in a matter of days . As a result, Dylan’s time, energy, and investment was focused on taking action and generating conversions .
• Mike Ferranti and Kevin Cohen discussed and illustrated how the Best Customers You Have Today are actually the root of The Answer to Acquiring Net New Customers that not only spend more , but more often than the rest.
• Cohen elaborated on specifically how Dylan’s developed a dramatically deeper view and understanding of the customer, developed new unique cohorts that explained the heterogeneity that existed in their customer base, and identified in high resolution who their Most Valuable Buyers really were — which then drove the target definition of for net new customers.

Table of Contents

• The Business Situation –  While Dylan’s was generating high consumer traffic, they lacked the high-value, repeat buyers that would drive their business.
• The Approach  – BuyerGenomics designed an intelligent, actionable data-driven campaign that specifically targeted net new customers who spent most like the best of their current base.
•  Our Methodology  – Within just three weeks, Dylan’s was able to generate a clear view of its customer base and implement a \”Buy-A-Like\” acquisition campaign.
• The Solution  – A multi-step omni-channel campaign was used to reach the right customers, at the right place, at the right time – driving engagement and understanding the motivating factors that led customers to purchase.
• The Results  – Dylan’s experienced massive increases in new valuable customer acquisition, conversion rate, average spend, and repeat purchase rate.
• The Future  – Dylan’s continues to grow as a vibrant, dynamic business, and BuyerGenomics continues to support Dylan’s growing high-value customer acquisition campaign.

Did Dylan’s Have a Problem Worth Solving?

The Business Situation: High Consumer Traffic & Trial, Low Customer Loyalty

Dylan’s one-time buyers: high traffic, low customer loyalty.

Dylan’s One-Time Buyers: High Consumer Traffic, Low Customer Loyalty (Cont’d)

The Approach: BuyerGenomics Buy-A-like Acquisition

BuyerGenomics’ Strategy

• Launch a customer intelligence platform on BuyerGenomics to rapidly enable the accurate quantification and targeting of high-value opportunities.
• Launch a targeted prospecting campaign that utilized the most advanced forms of customer intelligence, machine intelligence, and automation.
• Shift the mix of net new customers to those who spend more and are more likely to become repeat customers.
• Implement a multi-channel approach.

Our Methodology: The 70, 20, 10 Axiom

“70% of the marketers success comes from getting the target right, 20% of success comes from getting the offer right, and 10% comes from getting the creative right.”

Rapidly Produce Highly Actionable Customer Intelligence

• The range of available intelligence and insights we have available is truly astounding, relative to all previous experience. We know exactly who our MVB really is, and we don’t rely on anecdotal narratives like we used to.
• Cohen provided examples of demographics, psychographics, lifestyles, purchasing behaviors, channel behaviors, predictive analytics, and much more.
• Who is the customer?
• How should we talk to them?
• How to engage them over time?
• How to avoid stagnation and increase repeat purchases? (Today, 1-time buyers make up the bulk of customers)
• How to build the direct to consumer relationship?
• How to drive in-store retail traffic?

Rapidly Create Actionable Loyalty Measures

Discern What Makes the Customers More or Less Homogeneous

Move From Initial Data Capture to “Buy-A-Like” Acquisition in Three Weeks

• Centralize online and offline data.
• Create a 360 degree view of the customer.
• Perform optimal target intelligence to define the MVB.
• Match the target with Buy-A-like targeting to acquire high potential new customers.

Buy-A-Like Targeting

Buy-A-Like Targeting (Cont’d)

The Solution: Omnichannel Campaigns “Surround” Buy-A-Like Prospects

Omnichannel Campaigning – Drive Response and Understand Motivations for Responders & Converters

Design Direct Mail Creatives [That Worked]

The Results: Sweet Success

The Numbers Behind Dylan’s Scaling of Profitable Customer Acquisition

• 145% of New “Most Valuable Buyers” acquired vs. Goal.
• Over 225% Conversion Improvement (on 30% of Investment).
• Over 50% Increase in Average Spend.
• Over 63% Increase in Repeat Purchase Rate.

How Dylan’s Can Scale Up High Value Customer Acquisition

How Dylan’s is Scaling Profitable Customer Acquisition

The Future: Just Desserts

Next Steps: Autonomously Grow Lifetime Value and Profit with Machine Intelligence

• Prospects – Not yet customers, signed up for an email newsletter, etc.
• Actives – Individuals currently engaged and/or spending with you.
• In Market – Buyers currently shopping for your products and are prepared/likely to buy again.
• Faders – Subjects no longer purchasing at the rate their customer profile suggests they can.
• At Risk – Buyers most likely to stop spending with your brand and fall into attrition.
• Inactives – Customers who have ceased purchasing your products.

Conclusions 

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Customer acquisition in 2023: Everything you need to know about acquiring new customers

Everything you need to build and implement a solid customer acquisition strategy for your SaaS business. Attract the right customers, price competitively, and convert them into users with a seamless checkout and onboarding experience.

What is customer acquisition?

• The most effective way to grow?
• When is it important?
• The costs of acquisition
• How to create your strategy 
• How to measure success
• Real-life-examples

Customer acquisition FAQs 

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Successful SaaS businesses implement  SaaS growth strategies  across customer acquisition, retention, and expansion. They learn how to: 

• Acquire more of the right customers 
• Retain them for longer 
• And expand their accounts or broaden the pool of customers they can serve. 

This guide is all about part one of that journey, customer acquisition. 

Consistently acquiring new customers is crucial for all SaaS businesses. For new startups, it’s the difference between claiming a stake in the market and fading into the background. Here's a rundown of the core considerations and requirements for succeeding with your customer acquisition strategy. But first, a quick definition.

Customer acquisition is the process of gaining new customers. Acquisition is one of the most popular growth levers because it is the most immediate way to grow your customer base. It covers the new-business part of your  go-to-market strategy , like where and how you market your product, and how you shape your pricing strategy . It also covers how you drive the conversion of prospects in your buying cycle, or turn non-paying users into customers.

Customer acquisition is a finicky growth strategy because it gets harder and more expensive as your customer base grows and your potential, untapped market shrinks.

Additionally, acquisition only refers to the act of getting a customer to join. Effort is shuttled into the signup event, but often not beyond. That means that acquired customers may discontinue ( churn ) at any point. If these customers were acquired by brute force acquisition techniques and aren't actually interested in your product for long-term use, they're more likely to churn. You'll have to be extra careful with your  marketing efforts , to make sure you are reaching  potential customers  with profitable  lifetime value .

When your acquired customers churn out, you'll have to  replace that lost revenue in order to grow . If you're planning on acquiring more  new customers  to replace lost ones, you'll be pulling from that ever-diminishing potential market. This will leave you feeling like you're trying to fill a leaky bucket with a limited water supply.

What is a customer acquisition strategy? 

A customer acquisition strategy is the plan of action and all the tools a brand needs to attract new customers and convert them to paying customers. Using data, you can identify key consumer behaviors and available marketing opportunities. The information guides on the marketing channels you need to reach them. The right strategy can deliver a smooth customer experience leading to referrals and word-of-mouth marketing. 

Why is customer acquisition essential? 

You need loyal customers to grow your revenue. So, the number one benefit of effective customer acquisition is increasing your customer base and profits. Also, acquisition efforts are key in developing and maintaining strong brand awareness. In addition, business growth and expansion depend on acquiring new customers. 

Is customer acquisition an effective growth strategy? 

The SaaS community is obsessed with acquisition. We talk about it a lot. By studying 25,679 blog posts—to see what the SaaS community is interested in—we found that  nearly 8 out of every 10 posts were about acquisition .

But even though acquisition is a vital growth lever, it is often overplayed at the expense of other growth opportunities.  Retaining customers (getting them to continue using your product) and monetizing customers (improving the way you earn revenue by upselling or improving customer LTV) are other important and hugely effective ways to grow your SaaS business.

A 1% improvement in customer acquisition results in a 3.32% increase in bottom-line revenue. Meanwhile, a 1% improvement in  customer retention  results in 6.71% bottom-line improvement. Improving monetization by 1% results in a  12.70% increase in your bottom-line revenue .

Customer retention  and monetization cannot be overlooked when you're building and expanding a SaaS company, so monetization and  retention analysis  should be used in tandem with acquisition strategies to achieve maximum growth.

When is customer acquisition important?

Though acquisition is important throughout all stages of growing a SaaS company, it's most important at the beginning when you can't take advantage of other growth levers like retention and monetization.

In the early stages, you can give acquisition a little more attention. It's especially essential because at this point you need to focus on acquiring the right  first-time  customers and developing sustainable acquisition strategies. These early strategies will compound and iterate as your business grows. Setting up a good foundation of early customers will make acquisition, retention, and monetization easier later on.

According to SaaS VC Jason Lemkin,  the first 10 unaffiliated conversions  is an early indicator that your SaaS company will be successful. This is because these first early adopters have all come to the conclusion on their own that your product solves their problems.  Your first conversions give you validation that  your problem/solution fit is a viable business idea .

These early acquisitions are important in their own right, but they also provide a valuable learning opportunity to set your business up for future success. It's important at this stage to measure the  lead generation channels  and demographics (company type, job title, age range, etc.) of your acquired customers. By recognizing early patterns, you can develop an idea of your  target audience  to create a strong long-term acquisition strategy.

Understanding your market, even in these early stages, will also help you retain and monetize customers because you'll better understand what value propositions are important to them.

What are the costs of customer acquisition?

Customer acquisition is important to your SaaS company and should be used strategically—but focusing  too much  on acquisition has high costs.

Here is a video that explains CAC Payback and important benchmarks, originally created for Paddle Studios :

Takes focus away from other, cheaper growth methods

On a qualitative level, a blind focus on acquiring logos  prevents you from focusing on more sustainable growth methods . Acquisition is the SaaS growth equivalent of using a sledge hammer—it often isn't precise or strategic, and you don't have that many chances to do it effectively. The most reliable way to grow your business steadily and over a long period of time is by identifying and capitalizing on the value that your customers want from your product.  This happens by talking to your customers, collecting data on your market, and analyzing the data for patterns about what your customers value and what they're willing to pay.

This is how you'll  redesign your pricing strategy to better monetize your customers .

Depend too much on acquisition

On a quantitative level, focusing too much on your  customer acquisition process  can lead to your company becoming a “ CAC fiend. ” Customer acquisition cost, or your company's spend on each customer, is essential in acquisition. That's why you need to know your fully-loaded CAC to fully understand the unit economics of your business. It breaks down to dividing the total expenses to acquire customers by the total number of customers acquired:

Customer acquisition cost formula Customer acquisition cost = total expenses to acquire customers / total # of customer acquired

The numerator has to include all acquisition-related expenses in order to calculate a fully-loaded CAC. This includes monthly spend on paid advertising, sales and marketing costs, and the salaries for sales and marketing team members. It can add up quickly and may be higher than many companies realize. To minimize these costs, your acquisition needs to be strategic and targeted—not expansive and haphazard.

How to create a customer acquisition strategy 

On average, SaaS companies spend a mere 6 hours on pricing strategy.  This might seem like enough time to price your new product, but in reality, pricing should be far more than a "set and forget" strategy. 

If you don't  optimize your pricing  and review it regularly, the impact can be more detrimental than you think. It ultimately affects the rate at which you scale. 

If the price is too high, you'll outprice your customers and charge more than their perceived product value. Too low, and you sell yourself short. This risks your product looking like a "cheap" or, even worse, less effective option compared to competitors. 

In addition to the price point, you need to think about how you package up your product offering. This might be on a subscription basis, as a one-time purchase, or you might have different tiers with different features available at different price points. 

Time to spin the wheel (or read on) and find out how to ensure the price is right. 

Optimize your prices regularly 

Pricing should not be left to chance, nor should you blindly follow your competitors' pricing tactics. You need to understand your target audience, market and product value to optimize your pricing for profits. These steps should help. 

• Rely on hard data 
• Define your company goals and boundaries 
• Have clarity on your value metric 
• Create pricing tiers business model 
• Regularly monitor your pricing 

Clear a path to the checkout page 

Your pricing is right on the money, and your prospects are ready to convert into paying customers. Result. 🙌

Now all you need is the checkout and purchase flow to secure that all-important initial payment. Right? 

Not quite. A lot goes into maximizing these workflows for optimum conversion and goes back to decisions about how you want to sell. Let's get into it. 

• Determine your digital marketing channels 
• Spread the word 
• Optimize for maximum conversion 
• Secure that first payment 

Deliver on your promise 

A prospect has converted into a paying customer, and the initial transaction has been approved. Now it's time to fulfill your end of the bargain and give them access to your product (also referred to as provision). 

In a traditional retail business that sells physical goods, this is where you'd be packaging and shipping those goods out to the customer. With SaaS and digital goods, this process looks a bit different. 

Let's take a look at what it involves. 

• Decide how you will deliver your product. The onboarding must be seamless.
• Track whether the users are using the product effectively 
• Revoking access after it's been granted in case of delinquent accounts, trial completion, etc. 

Keep financial obligations above board 

You must take into account sales tax and financial compliance at every point across your customer and payment journey. 

First up, sales tax. For acquisition, specifically, this includes making sure you are collecting the right amount of sales tax at the checkout - this will be different depending on the type of software being sold and where your customers are based. So for this, you need access that tells you exactly where your customers are coming from to avoid getting caught out. 

Other financial compliance regulations also exist worldwide - each with its nuances. For example,  the rules regarding 3DSecure on one-time and recurring purchases are different in India than in many other countries . You'll need some dedicated resources to manage compliance and look forward, so you're prepared for any new regulations or changes to existing ones that come into play. 

How to measure customer acquisition success 

Understanding how the different parts of your acquisition strategy are performing will help you see what's working and where there's room for improvement. 

Below are several different  SaaS metrics  to track. 

• Customer Acquisition Cost (CAC) : Total cost for the business to acquire each new customer. 
• Conversion rate : The percentage of prospects that convert into customers (or take a desired action on a page): This could be customers who complete the checkout and make a purchase or those who sign up for a free trial (or who moved from free to paid). For sales-led businesses, it could be the number of prospects who sign up for a demo or ask to speak to sales. 
• New Monthly Recurring Revenue (MRR) : The monthly amount you receive from new subscription customers. You can combine this metric with CAC to determine the profitability of your new customers. 
• Daily active users : The number of users who log in and use your product daily. 

Customer acquisition strategy pays off 

Framer case study .

Design software, Framer's pricing and plans page is a masterclass for SaaS businesses. If you look at the screenshot below ( or check out the live page ), you can see how Framer use pricing to effectively: 

• Cater to different customer segments, with different packages for individuals and teams 
• Display the value from each package clearly, and concisely 
• Hook customers in with a demo and trial period 
• Offer flexibility in how customers bill, with monthly and annual options (and discounts!). 

Read more about Framer's story here.  

iMobie case study 

iOS and Android transfer, manager, and maintenance software,  iMobie  is a great example of optimizing your checkout and payment processes that can boost conversion. 

To tackle its low conversion rate, iMobie: 

• Localized the process with geo-specific pricing, currencies, and the correct sales tax calculations. 
• Implemented flexible subscriptions with a one-click upgrade, downgrade, pause, and cancel options. 
• Optimized its checkout and payment page design. 

And the result? 

iMobie's conversion rate improved by over 20% in Germany and France, and over 10% in Japan. 

Read more about iMobie's story here.  

Take the headache out of growing your software business

We handle your payments, tax, subscription management and more, so you can focus on growing your software and subscription business.

What does customer acquisition mean? 

It means gaining new customers and encompasses the acquisition channels and all activities involved. It is the most immediate way to grow your customer base. 

It is a plan of action and tools for how a brand will acquire new customers. A solid strategy requires using hard data to formulate the necessary steps to an effective customer acquisition strategy. 

Why is a customer acquisition strategy important? 

A customer acquisition strategy is critical for establishing your hold on the market. As a result, you can bring in new clients and grow your revenue. 

What are the types of customer acquisition? 

Types of customer acquisition techniques include: 

• Social media marketing 
• Content marketing 
• Referral program 
• Search engine optimization(SEO) 
• Mobile marketing 
• Paid advertising 
• Email marketing

Related reading

• Free Resources

Customer Acquisition: A guide to using LinkedIn advertising, AI analysis, and SEO

This article was distributed in the MarketingSherpa email newsletter .

We’ve been helping marketers improve their funnel in the MECLABS SuperFunnel Cohort community (feel free to join us for a ChatGPT, CRO and AI: 40 Days to build a MECLABS SuperFunnel LiveClass to get ideas for improving your own funnel from the cohort).

The first step in any successful funnel is customer acquisition. So to give you ideas for attracting potential customers to your funnel, today we bring you three quick case studies – one using a paid tactic, and two using organic tactics:

• Paid advertising – How an AI solution improved its advertising messaging thanks to customer interviews and demo attendance.
• Technical SEO – How an HR tech platform used AI to help migrate subdomains on its main domain to improve SEO.
• Keyword-driven SEO – An ecommerce company’s five-step plan for finding keywords to attract organic traffic.

Quick Case Study #1: AI solution interviews customers, increases ad CTR from 3% to 10%

“Before I joined the Aimondo team, the company did not consider LinkedIn to be a decent customer acquisition source,” said Alisdair Hunter, Head of Growth, Aimondo UK .

BEFORE – Wrong pain points

Cost per lead was very high (>$120), and the clickthrough rate (CTR) was 1% to 3%.

“Pretty soon I realized that our messaging conveyed in the single-image ad LinkedIn campaign was built on the wrong assumptions about customers’ pain points,” Hunter said.

The marketing team had asked the sales team about customer pain points. The sales team provided these pain points:

• Low quality of data used for pricing workflows.
• Price optimization projects are too complex to handle, and not every company has someone experienced enough on their team to tell them where to start.

Based on these insights, the marketing team crafted messages that were supposed to reflect these pain points. For example, the image headline in one ad read “46% of sellers get wrong pricing date.” Another ad’s image headline read “Piece together your winning pricing strategy.”

Creative Sample #1: LinkedIn ads with average CTR, before

AFTER – Jobs-to-be-done framework

In February, a digital marketer from the team attended three demo sessions and conducted four customer interviews with existing customers. After processing the insights, the team quickly realized that insights delivered by the sales team were not exactly correct.

Instead of using generalizations (complex projects, low-quality data), they switched to addressing very precise ‘jobs to be done’ that prospects had.

“New messaging for the next single-image LinkedIn campaign was built on the following customer interview-driven insights: our prospects struggle to fulfil a very precise task – calculate price elasticity, and our prospects have to improve the quality of their demand forecasts,” Hunter said.

For example, one ad’s image headline read “What is the price elasticity break point for your product?” Another ad image headline was, “Does your April sales forecast account for weather data?”

Creative Sample #2: LinkedIn ads with average CTR, after

RESULTS – Higher CTR

CTR went from 1-3%, to 10-12%. Average cost per click (CPC) remained less than $3. 

“Customer interviews come in exceptionally handy. They provide qualitative data (therefore, you can very well get away with less than 10 interviews) for the initial hypothesis that can be proved or disproved via surveys with multiple participants. Or – like in our case – through LinkedIn campaigns,” Hunter said.

Quick Case Study #2: HR tech increases organic traffic by 1,200% in four months using AI-driven site migrations 

Founded in 2019 by Dee Coakley and Emily Castles, Boundless was born from the belief that people should have the freedom to shape their work lives without forfeiting their right to secure employment. Today, Boundless is operational in 25 countries.

The global employment, benefits, and payroll platform had two subdomains – guides and blogs. Boundless published over 25 country guides (each consisting of 10-12 subpages) which resided on the guides subdomain, while the blog content had hundreds of articles on a separate blog subdomain.

“We had all these different types of content sitting on different subdomains which made it both difficult to manage, but also suboptimal to our traffic goals. We decided to migrate everything to our main domain, boundlesshq.com,” said Irina Dhambazova, Head of Communications, Boundless .

However, the team had a limited budget.

“Limited budgets means there simply isn’t the luxury of time to spend hours trying to decide which content will be carried over and where retired content will be redirected to, so we turned to data using AI to help us deliver within budget” said Andreas Voniatis, Founder, Artios (Boundless’ SEO consulting firm).

The challenge was to bring across the content to the main website without losing rankings and traffic. “What most non-SEO experts won’t always appreciate is that before migrations, search engines have an existing model of your content and how they relate to each other. As soon as you migrate content, that model changes which is where the risks of losing traffic happen,” says Voniatis. “As soon as you migrate content on a website, even if it is within the same domain, you change the search engine model.”

The team decided on which content they could migrate and leave behind using the Pareto principle – 80% of your results come from 20% of your actions. “We were able to help them identify which content had SEO value by using Pareto on their Google Search Console (GSC) logs to work out which of the content drove most of the traffic,” Voniatis said.

Using AI to create redirect maps

While the URL structure for blogs and guides was straightforward, the team then had to consider what to do with articles they wouldn’t carry forward.

Some marketers might use the 410 GONE HTTP status code. Other marketers might redirect these all to the home page and lose any backlinks and traffic.

But the team wanted to find the best live pages to redirect the URLs to, and decided to use a language model to test the similarity of the removed content to the live content. “Historically for a site with many pages, this would have taken at least a week of analysis and often with some mistakes, but with AI we were able to carry out this analysis and produce a redirection map within a day which helped to keep the whole project within budget,” Voniatis said.

Although no design changes were involved, the team wanted to ensure the staging versions of the migrated content will perform comparably if not better than the existing live versions. So they audited the staging versions of the migrated content.

While the content performed fine in terms of Core Web Vitals (CWV) and being indexable, the team could see that it wasn’t as discoverable. Again, they used AI to model the distribution of internal links to content and were able to pinpoint articles that were insufficiently cross-hyperlinked from other content. “This not only helped mitigate the risk of visibility loss post-migration, but it also actually helped all content maintain its inclusion in Google,” Voniatis said.

Results – More traffic

Four months after the migration switchover, traffic increased by 1,200%, enabling Boundless to rank for English searches worldwide in Google for its main target terms around ‘Employer of Record [country],’  ‘Employees benefits in [country]’ and simply ‘Employer of Record.’

“The traffic growth since the migration was mad and quite unexpected. Not that we didn’t expect good things, but even we were surprised at how the traffic growth wildly exceeded the traffic growth levels forecasted,” Irina Dhambazova concluded.

Quick Case Study #3: Ecommerce company’s five-step plan for growing organic traffic from 10,000 to 650,000

“When I first joined Kicks Crew, we were laser focused on marketplace selling and were only averaging 15 orders per day. In two years’ time, we grew revenue by 100x with exponential growth,” said Gary Hui, Co-founder and Chief Growth Officer, Kicks Crew .

Here is the step-by-step process that the team conducted to achieve that growth.

Step #1: Baseline SEO Audit

The team started by conducting an SEO audit of the global ecommerce platform for sneakers’ website. The baseline focus of the audit examined organic traffic and the number of ranking organic keywords (spots 1-100 in the Search Engine Results Pages, aka SERPs).

Step #2: Identify ‘easy win’ keywords

‘Easy win’ keyword opportunities are keywords that the site is already ranking for in positions 4-30 (a.k.a, the first three pages of the SERPS). Google already sees the site as relevant for these key phrases. The team sought to capitalize on these existing keywords by using them, and variations of them, in more blog posts and webpages. The team:

• Ensured the site’s on-page SEO features these keywords or phrases
• Added additional, keyword-related content to the site
• Built links to these pages from high-quality, high-authority, relevant sites

Step 3: Competitive gap analysis

The focus was to identify missed opportunities and what key terms the competitors were ranking for that Kicks Crew was not. As a result of the competitive gap analysis, thousands of keywords were identified and up for grabs, including ‘Chucks’ and ‘Kicks on fire.’

Step #4: Ramp up blog content

Now that all of these keywords and gaps were identified, the team ramped up their content production and began creating relevant blog posts for the site to get the site to rank for longtail, intentional keywords. For instance, the team published posts about sneaker care, how to wear various sneaker styles, and how to resell sneakers.

Step #5: Guest posts

Guest posts were used to target high-intent, bottom-funnel keywords that users are generally plugging in when they’re ready to buy. They created posts on both sites with high domain authority and traffic, and sites with less domain authority and traffic.

RESULTS – Sales increase

The most important result is the sales increase – the site’s sales increased by 100x in two years.

The SEO improvements contributed to this increase. At the start of the campaign, Kicks Crew was ranking for around 40,000 keywords and at the end of the campaign it was ranking for almost 200,000, with a significant increase in keywords ranking in first page and top three positions. For example, Kicks Crew ranked in the No. 1 position for the keyword ‘authentic air jordan 1.’

Of course, this had an impact on traffic as well. Kicks Crew went from 10,000 monthly visitors to more than 650,000. 

“As mentioned, our site was averaging 15 orders per day which was just unacceptable to us as a company but most of all, we felt our end customer was missing out on our product offering. We are proud of our platform and knew what we had to offer was worth a portion of the market share. Through implementing a strategic SEO strategy, we were able to reach our target end customers and further connect with them by giving them relevant, useful blog content that they value,” Hui said.

“They remained flexible and passionate about reaching their end customer which wound up benefiting them immensely in the long run,” said Marc Hardgrove, CEO, The HOTH (Kicks Crew’s marketing agency).

Related resources

Ecommerce Research Chart: Acquisition cost per customer

Loyalty Marketing: How to get customers to stick around (and keep buying)

Growth Marketing: Attribution is a myth, but you need it

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Sapio User Acquisition Case Study: How We Earned a 3,072% Spike in Weekly App Installs

User acquisition (and customer acquisition) requires more than great content – it demands an understanding of your audience. You need to know what content they read, what they want, and what issues they may have.

In essence, you need to know how to find your audience and connect with them .

When we launched our dating app, Sapio , we knew getting into the heads of our target audience would be a crucial, ongoing process.

But the effort paid off.

In this user acquisition case study, we’ll explain how our strategy led to a 3,072% increase in weekly app installs in just five weeks.

While we also did general brand awareness work by promoting content campaigns, there were three main promotional tactics that helped us achieve an increase in installs .

Read on to discover what tactics we used and the results they achieved.

The Importance of Timeliness

Because Sapio is a dating app, we knew Valentine’s Day would be a huge opportunity for us.

To reach our target audience through relevant media coverage, we considered all possible pitch angles and settled on two:

Note: While the tech angle is less relevant to Valentine’s Day, the holiday still provided the writers with a newsworthy hook to explore the tech side of a timely app.

The results were noteworthy, to say the least. We earned media coverage on these sites in the span of two days :

The Weight of Authority

What the Valentine’s Day-related pitches had in common was that we offered interviews with the founder, Kristin Tynski, to all of them.

This kind of access is appealing to publishers, who are looking for the most authoritative voices for their stories .

There are two primary benefits to having experts or those with authority interact with the media:

• When you give writers an authoritative person to interview, you’re making their jobs easier, meaning they’re more likely to take you up on the story.
• When you’re open and accessible, writers may be more likely to approach you for an interview (since they’ve seen you interviewed before).

After presumably seeing other coverage of Sapio, a Toronto Star reporter reached out to our team:

The Personalization of Pitches

Neither of the above strategies would’ve worked without the use of a highly researched, customized promotional strategy . Our digital PR team bases its work on the principle that we’re not in the business of sending out emails – we’re in the business of forming honest, human connections with people.

And publishers appreciate it!

To give you a sense of what we’re talking about, here’s a look at an actual pitch that resulted in media coverage .

Creating a strong user acquisition strategy necessitates the following:

• Understanding who your target audience is
• Researching where this audience consumes content online
• Reaching out to those publishers to get your brand featured
• Providing writers value so your content receives positive media coverage

The value add is key – by providing writers a news hook (or two) when you make your pitch, you’re much more likely to be successful.

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Decoding CAC: An introduction to Customer Acquisition Cost (CAC)

One of the key metrics that captures the attention of marketers and entrepreneurs alike is customer acquisition cost (CAC). It's a metric that plays a pivotal role in determining the effectiveness and sustainability of a company's growth strategy. In this blog, we'll understand the complexity of CAC, exploring its definition, importance, calculation, and strategies to optimize it.

Table of Contents:

What is Customer Acquisition Cost (CAC)?

• How to calculate CAC
• Why is CAC important?
• Factors affecting CAC
• Improving Customer Acquisition Cost (CAC) with real-life examples

CAC cheat sheet for startups and SMBs

Customer acquisition cost (CAC) is a metric that measures the average cost of acquiring a new customer. It's essentially the total spend on sales and marketing efforts divided by the number of new customers acquired during a specific period.

How to calculate Customer Acquisition Cost (CAC)

The basic formula for calculating CAC is:

CAC = Total Sales & Marketing Costs / Number of New Customers Acquired

This includes costs such as:

Marketing expenses: Advertising, content marketing, social media marketing, search engine optimization (SEO), pay-per-click (PPC) advertising, etc.

Sales expenses: Salaries and commissions for salespeople, sales tools and technology, training, etc.

Other costs: Referral programs, public relations, events, etc.

Let's look at an example to illustrate Customer Acquisition Cost (CAC). Imagine an SMB sells workout equipment online. During a recent sales campaign, they invested the following:

Marketing expenses:

• $10,000 on social media ads
• $4,000 on search engine ads
• $2,000 on influencer partnerships

Sales expenses:

• $6,000 on salaries for sales representatives
• $2,000 on sales software

Through this campaign, they acquired 300 new customers. To calculate their CAC, they would use the formula:

CAC = Total Sales and Marketing Costs / Total New Customers Acquired

CAC = ($10,000 + $4,000 + $2,000 + $6,000 + $2,000) / 300

CAC = $24,000 / 300

Therefore, their customer acquisition cost for this campaign was $80 per customer.

This means they spent an average of $80 to acquire each new customer. Whether this cost is good depends on factors like industry benchmarks, customer lifetime value, profit margin, campaign specifics, and growth metrics. Achieving a low customer acquisition cost (CAC) isn't necessarily the primary goal. Instead, our focus should be on obtaining high-quality customers to ensure sustainable growth.

Why is Customer Acquisition Cost (CAC) Important?

CAC is a crucial metric for businesses of all sizes because it helps them understand:

The efficiency of their customer acquisition efforts: A low CAC indicates that you're effectively bringing in new customers at a reasonable cost. Conversely, a high CAC suggests that your acquisition strategies need refinement. High CAC relative to the customer's lifetime value can lead to unsustainable business models.

The profitability of customer relationships: By comparing CAC to customer lifetime value (LTV), you can gauge whether your customers are generating enough revenue to cover the cost of acquiring them. Your LTV should be several times higher than your CAC.

• The effectiveness of different marketing channels: Tracking CAC by channel can help you identify which marketing efforts bring in the most customers at the lowest cost.

Related content: A complete guide to customer acquisition strategies

Factors affecting Customer Acquisition Cost (CAC)

Several factors can affect a company's CAC, including:

Industry:  Different industries have different average CACs. For example, acquiring customers in the B2B space is typically more expensive than in the B2C space.

Business model: Subscription-based businesses often have lower CACs than businesses that sell one-time purchases.

Customer acquisition channels: Some channels, such as PPC advertising, can be more expensive than others, such as organic SEO.

• Target audience: Your target audience's demographics and online behavior can impact the cost of reaching them.

Improving Customer Acquisition Cost (CAC) with real-life examples

There are many ways to improve your CAC, such as:

Optimizing your marketing campaigns: Focus on targeting the right audience with the right message and using the most effective channels.

Case Study:  Fashion retailer ASOS partnered with an AI platform to target Facebook ads based on real-time purchase behavior and interests. This resulted in a 25% increase in click-through rates and a 10% decrease in CAC compared to traditional demographic targeting. 

(Source: Retail TouchPoints, " ASOS Leverages AI for Hyper-Personalized Facebook Ads ")

Improving your sales funnel: Make sure your website and sales process are optimized for conversion.

Case Study:  Insurance company Lemonade implemented AI-powered chatbots to answer customer questions and guide them through the quote process. This reduced the average sales cycle by 20% and lowered CAC by 15% due to increased online conversions.

 (Source: Forbes, " Lemonade Insurance: How AI Chatbots Are Transforming Customer Service ")

Offering customer referrals and incentives: Encourage existing customers to refer new customers.

Case Study:  Fitness brand Peloton partnered with TikTok to launch a campaign featuring user-generated content and influencer collaborations. This resulted in a 30% increase in website traffic and a 5% decrease in CAC from new customer segments attracted through the platform. 

(Source: Digital Commerce 360, " Peloton Partners with TikTok for First Brand Campaign ")

Building strong brand loyalty: Create a positive customer experience that will keep customers coming back for more.

Case Study: Gaming platform Roblox created a thriving virtual world where users can interact and create content. This fostered a strong brand community, leading to a 40% increase in user engagement and a 12% decrease in CAC due to viral word-of-mouth marketing. 

(Source: VentureBeat, " Roblox's User-Generated Content Strategy Fuels Growth and Engagement ")

Leveraging multi-channel marketing: Diversify marketing channels to reach a broader audience, potentially reducing dependency on one expensive channel.

Case Study:  Home improvement retailer Lowe's integrated its online and offline channels, allowing customers to seamlessly research products online and purchase them in-store or vice versa. This improved customer experience, leading to a 15% increase in repeat purchases and a 7% decrease in CAC due to higher customer lifetime value. 

(Source: Retailbrew, " Lowe's Omnichannel Strategy Drives Customer Satisfaction and Growth ")

Focus on customer retention: Focus on customer retention can indirectly impact CAC by increasing the customer lifetime value, making acquisition costs more justified.

Case Study:  Ecommerce platform Zalando revamped its loyalty program with tiered rewards and personalized recommendations based on purchase history. This resulted in a 20% increase in customer retention and a 8% decrease in CAC due to reduced churn and increased customer spend. 

(Source: Ecommerce News Europe, " Zalando Revamps Loyalty Program with Personalized Rewards and Recommendations ")

Step 1: Define your goals

Target customer: Who are you trying to reach? Understand their needs and behavior.

Acquisition channels: Which channels will you use to reach them? (Social media, content marketing, SEO, etc.)

Cost tracking: Decide how you'll track costs across each channel (e.g., ad spend, content creation costs).

Step 2: Calculate your current CAC

Total Sales & Marketing Costs (period) / # New Customers Acquired (period)

Step 3: Analyze & improve

Channel breakdown: Calculate CAC for each acquisition channel. Identify high-performing and low-performing ones.

Customer Lifetime Value (CLTV): Estimate the average revenue each customer generates over their lifetime.

Profit margin: Analyze your profit per customer. Ensure CAC is sustainable within your margins.

Optimize Spending: Allocate budget towards high-performing channels and adjust spending based on learnings.

Step 4: Continuously monitor and refine

Regularly track and update CAC for ongoing campaigns.

Experiment with new channels and tactics to find cost-effective acquisition strategies.

Use A/B testing to optimize ad copy, landing pages, and conversion funnels.

Benchmark your CAC against industry competitors to identify areas for improvement.

Bonus tips:

Focus on acquiring high-quality customers with long-term potential.

Leverage content marketing and referral programs for organic acquisition.

Automate lead generation and nurturing processes to reduce costs.

Use analytics tools to track key metrics and measure campaign performance.

• Remember, CAC is a dynamic metric—it should evolve as your business grows.

Mastering the art of customer acquisition is a continuous challenge. CAC stands as a compass, guiding companies through the intricate landscape of growth. By understanding, calculating, and optimizing Customer Acquisition Cost, businesses can not only survive but thrive in an increasingly competitive market. It's a continuous journey of refinement, adaptation, and strategic decision-making that ultimately paves the way for sustained success.

Here are some additional insights on CAC:

CAC isn't a one-size-fits-all metric: What's considered a good CAC for one company might be too high or too low for another. It's important to benchmark your CAC against your industry and competitors.

CAC should be tracked over time: This will help you identify trends and see how your customer acquisition efforts are improving.

• CAC can be used to make more informed investment decisions: For example, if you know that your CAC is high, you might decide to invest in marketing automation tools to improve efficiency.

Kiruthika Devi & Yash Gupta

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A guide to your customer acquisition strategy

• Post category: Small Business Success

Regardless of how long you’ve been in business, if you want your company to grow, you need to continually add new customers and improve your customer retention . The best way to do this is through a repeatable, sustainable process that will predictably generate new revenue over time — a customer acquisition strategy .

What is customer acquisition?

In simple terms, customer acquisition is the process of acquiring new customers . It involves moving them through the customer journey or customer acquisition cycle from the brand awareness and lead generation stages to the point where they become a paying customer for your business. 

What is a customer acquisition strategy?

A customer acquisition strategy is a well-defined plan to help prospects find your brand, guiding them through their buying process until they become customers. 

It details acquisition tactics such as:

• Customer acquisition goals, like the desired number of customers
• A description of your ideal prospect and best customer
• Specific digital marketing efforts you’ll employ
• How you’ll measure successful customer acquisition
• The timing of various tactics
• Who will be responsible for which elements

The idea is to educate and engage your ideal potential customers so they become leads that eventually convert to loyal customers who buy your product or service.

Why do you need a customer acquisition strategy?

It’s important to develop a carefully considered customer acquisition marketing strategy . Otherwise, you risk wasting time, money, and resources. Additionally, having a user acquisition strategy shows other stakeholders that you’re going into business with a plan. It can help win the trust of investors and partners. 

Although no plan is perfect, you need to start somewhere and make adjustments based on performance. Having a customer acquisition plan gives you an advantage over competitors who don’t, allowing your company to grow more consistently.

How to plan and execute your customer acquisition strategy

Wondering how to create a customer acquisition strategy ? Here are the steps you’ll want to take to plan and execute yours:

1. Create your team

Involve all the appropriate members of your staff as you create your acquisition strategy. This should include those responsible for sales, marketing, product, customer service, and leadership.

These are the stakeholders who will work to attract and retain users. Involving them in the process helps keep your user acquisition strategies on point. By incorporating more viewpoints, you avoid overlooking important details to ensure you have a complete plan.

2. Define your target audience

It’s important to understand who your target audience is before spending time and effort on marketing. Although you want to get the word out about your company and offerings, you also need to be sure you know who you’re talking to for maximum impact. Otherwise, your efforts will be wasted.

Some questions to answer include:

• Are they executives, employees, or freelancers?
• What are their basic demographics , i.e. what age are they, etc.?
• What are their likes and dislikes related to your product or service?
• What are their roles and responsibilities?
• How and where do they go to research products or services like yours?
• Which social media platform (s) do they frequent? LinkedIn , Facebook, etc.?
• What issues are they likely facing that your product or service can solve?

The more you know about your audience, the better—and the more success you’ll have when implementing your strategy. That’s because you’ll be able to create content, such as blog posts, that are better targeted toward them.

Of course, this step will be significantly easier if you already have existing customers , as it takes the guesswork out of the equation. You can speak to or survey your customer base to learn more about them and their preferences. Whatever you do, do not proceed to the next step until you have completed this critical one. This step could be the difference between success and failure, and it’s the only way to ensure that your marketing and ad spending are worth it.

3. Define your goals

Before selecting which tactics to include in your acquisition strategy, you need to define what you want to accomplish. Without customer acquisition goals, you won’t know which approaches to use. It’s like heading off on a road trip without a map or destination.

Your goals should include information such as how many new customers you want to gain over what time period and how you define customer loyalty . Start by setting yearly goals, then break them down into quarterly and monthly targets. 

It’s a good idea to set up your revenue goals first. Based on these goals, you’ll know exactly how many customers you need to acquire within a given time frame. If you have a defined sales process with metrics relating to how customers move through your sales funnel , goal-setting will be that much easier. Leverage this information to define goals for each stage in the customer acquisition process .

4. Select your methods and channels

There are a variety of different customer acquisition methods . They include paid or free as well as inbound or outbound options.

With inbound marketing, you attract your audience by helping them find you. A good inbound acquisition strategy example is SEO -optimized landing pages . These pages are solely created to drive lead generation by convincing visitors to provide you with their contact information. The landing pages are optimized for SEO to ensure that they rank higher in the search engines, which can increase traffic.

Outbound marketing involves going where your customer is, such as cold-calling off a purchased list or having a booth at a trade show. Social media and search engine ads, like Facebook ads or Google ads are other popular outbound marketing methods for attracting first-time audiences. 

The best methods for your business will be based on your ideal customer , resources, and the other approaches you employ in your overall strategy.

Content marketing is an excellent place to start. It drives organic search traffic to your website, captures leads, nurtures them until they’re ready, and helps them make a buying decision. It’s an effective method for all types of businesses and lies at the core of many customer acquisition strategies . This is particularly true because today’s buyers are 50-70% through their decision-making process before they engage with a salesperson.

If you already have a few customers, you can also launch a referral program to give a boost to your customer acquisition plan. Referrals help you leverage the influence of your existing customers to get new ones. For each successful referral, you can reward your customers with freebies. These incentives help to keep check customer churn in check.

5. Create engaging content

Start by creating a library of unique, valuable, and educational content that helps your ideal customers answer their questions and solve their challenges throughout the buying process. You’ll need to decide which content options best suit each stage of your funnel .

Some options include blog posts, e-books, case studies, white papers, videos, and webinars . The content format choices will depend upon what your customers prefer. For instance, if your customers are younger buyers, you can choose to leverage short-form videos. Meanwhile, if your audience consists of executives, they may choose to read e-books or case studies.

6. Create conversion points

Next, you need to provide interested parties with the opportunity to convert into leads and enter your sales funnel . This happens through appropriate calls to action (CTAs) on various pages of your website, depending on where the prospect is in their buying process. 

You’ll want to create conversion points for each stage of your funnel to boost your overall conversion rates and gather more leads. Landing pages are great points for your customer acquisition strategy as their sole goal is to drive lead generation . 

7. Drive qualified traffic to your site

Also called “demand generation,” you want to help your potential customers to find your site so you can convert them into leads and add them to your sales funnel . Potential tactics to leverage here include search engine optimization ( SEO ), social media marketing , email marketing , trade shows, direct mail, pay-per-click ( PPC ), and search advertising. The best digital marketing options will vary based on what works best for your audience and your budget.

8. Nurture your leads

Using marketing automation will simplify and streamline your customer acquisition efforts , improve your customer experience and reduce your marketing costs while helping you stay on track. An email newsletter—or any other cost-effective method of staying in touch with your leads until they’re ready to buy—will increase your customer acquisition results.

The idea is to keep leads engaged and show them what you have to offer.  Providing them with middle-of-the-funnel content such as case studies, client testimonials, and e-books is a great way to accomplish this. Such content can help position your brand as an authority figure in the industry and build their trust in it, too. 

9. Leverage a CRM

A customer relationship management (CRM) platform is integral to any user acquisition strategy. Ideally, it integrates with marketing automation tools to simplify the lead generation and nurturing process while garnering valuable insights, lead data, and important metrics . 

With a CRM, you can build high-converting landing pages with contact forms, enabling you to capture their contact information seamlessly.

It arms your sales team with a history of each lead’s interactions with your website and your brand, better preparing them to speak with prospects during each encounter. 

A CRM also makes it easier for you to determine where leads are getting stalled so you can figure out where to add more content to advance prospects through the process. It will also tell you which CTAs are working best and what needs to be adjusted.

10. Measure your results and refine your strategy

There are many ways to measure your customer acquisition success. These include conversion rate , rate of new customer acquisition , and customer acquisition cost ( CAC ) . Once you review these metrics , you’ll be better equipped to determine which user acquisition strategies are working and which ones aren’t the best fit for your business. 

Be sure to measure results routinely to stay current with ever-changing market conditions and buyer preferences. This will help you see consistent growth while receiving the best possible results for the time, money, and resources invested.

What’s your customer acquisition plan?

A customer acquisition strategy is a must-have for every business that intends to grow. Without it, you’re shooting arrows in the dark and likely wasting your marketing budget. 

Along with this customer acquisition plan, it’s also necessary to have the right tech that can help you build landing pages , capture leads, and nurture them. Act! ticks all the right boxes. If you’re interested in seeing how an all-in-one CRM and Marketing Automation software can improve your customer acquisition, try Act! for free for 14 days . No credit card or download is required. 

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The Hard Truth About Acquisition Costs (and How Your Customers Can Save You)

Published: August 02, 2023

Trust in businesses is eroding. Customers are impatient. Marketing is getting expensive. Sales is more challenging, and to top it all, the math behind most companies' acquisition strategies is simply unworkable.

The state of customer acquisition is appalling. So, what's your only point of leverage? An investment in customer service.

In this post, we'll delve into the hard facts about the difficulties of attracting new customers and how you can leverage your customer service to grow your business despite those challenges.

Table of Contents

Consumers don't trust businesses anymore.

Acquisition is getting harder., your customers are your best growth opportunity..

• Putting It All Together: The Inbound Service Framework

The way people interact with businesses is changing negatively. The internet's rise three decades ago changed the business landscape more than anyone could have imagined in the 1990s. And now it looks like the internet itself is changing.

The rapid spread of misinformation, spam, and unreliable websites has made people doubt every piece of information they find online.

A study conducted by G2 on 1000+ B2B buyers shows a massive drop in buying sources.

Image source

When buying software, buyers' reliance on:

• The company's website declined by 5%.
• The company's sales team declined by 4%.
• Review sites increased by 5%.

One main reason is that consumers don't trust information about the business and software. Every one in two respondents said they couldn't find credible information about the company anywhere.

The content isn't specific to their industry, vendor websites are unreliable, and it's hard to find independent content to support them.

A bigger problem is that business leaders have no idea. They overestimate how much they're trusted. A PWC study shows a 57% gap between how leaders estimate versus how much consumers really trust them.

We used to trust salespeople, seek out company case studies, and ask companies to send us their customer references — but not anymore.

Today, we trust friends, family, colleagues, and look to third-party review sites like Yelp, G2Crowd, and Glassdoor to help us choose the businesses we patronize, the software we buy, and even the places we work.

The rapid spread of misinformation, concerns over how online businesses collect and use personal data, and a deluge of branded content all contribute to a fundamental shift — we just don't trust businesses anymore.

Consumers are also becoming more impatient, more demanding, and more independent.

According to The State of Customer Service report published by Netomi:

• 39% of people have less patience now than before the pandemic.
• 43% of consumers find long wait times frustrating.
• 3 in 5 people have hung up on an agent at least once out of frustration.
• Customers will wait 2 minutes for a call with an agent.

Modern consumers are also unafraid to tell the world what they think.

More than half (53%) reported sharing a negative experience with a company's customer service, which isn't entirely their fault because 62% also reported getting ghosted by the agent.

Your customers need you less than they used to. They learn from friends, not salespeople. They trust other customers, not marketers.

The erosion of consumer trust is a complicated issue for companies to grapple with. But as if that wasn't enough, the internet, which has always transformed the traditional go-to-market strategy, is moving the goalposts again.

What do I mean?

Let's break this down into two functions: Marketing and sales.

1. Marketing is more expensive.

We've taught inbound marketing to many companies and built software to help them execute it. Inbound marketing accelerated business growth through a repeatable formula:

• Create a website.
• Create search-optimized content that points to gated content.
• Use prospects' contact information to nurture them to the point of purchase.

This still works, but the market is experiencing five trends that have made it harder for growing businesses to compete with long-established, better-resourced companies.

Trend 1: Google is taking back its real estate.

Much of modern marketing depends on getting found online.

Without the multimillion-dollar brand awareness and advertising budgets of consumer goods titans, a growing business can best compete by creating content specific to its niche and optimizing it to appear on search engines.

For years, driving traffic from search engines like Google was easy.

Not anymore.

Google, the arbiter of online content discoverability with a 93% market share , has made significant changes in the last few years, making it harder for marketers to run this model at scale without a financial investment.

First, Google is reclaiming its traffic through featured snippets and "People Also Ask" boxes. Here's how Google displays the necessary information as a featured snippet to stop users from leaving the platform.

Then just below it, you see "People also ask" boxes, a different feature snippet permutation. These display questions related to your original search, live on the SERP, and are expandable with a click, like so:

Each time you expand a "People also ask" section, Google adds 2-4 queries to the end of the list.

What's the effect of both?

A study by EngineScout says featured snippets and "People also ask" boxes got 35.1% and 6% of total organic clicks, respectively. Meaning you not only compete for the first position but also for featured snippets.

Second, Google changed its search engine results page (SERP), moving search ads from a sidebar to the top four slots. Organic results fall much further down the page, and many times, they disappear entirely.

Search results often show YouTube videos — mostly for tutorials or how-to queries.

The third and newest of all: Generative AI .

Google has integrated AI and chat in SERPs that might replace featured snippets and "People also ask" boxes, but the catch is — you can also ask a follow-up question.

If you need more clarity, there is no need to click on the link to read the post; simply ask a follow-up question.

Of course, people can still click on links, but clicks are definitely going to go down.

Voice search adds a fourth wrinkle to these shifts — the winner-takes-all market.

As voice search has increased ( 50% of U.S. audiences use voice search ), it's become increasingly important to become the answer, as voice assistants only provide one result when asked a question.

Overall, Google is constantly evolving (making it difficult for companies to drive traffic), and if it's your only acquisition strategy, you need to think twice.

Search won't ever become purely pay-to-play. But in a world where screen real estate is increasingly dominated by sponsored content, marketers need to factor paid tactics into any organic strategy.

If ads are shown before organic listings, bidding for the right keywords may be a better investment.

Trend 2: Social media sites are walled gardens.

A decade ago, social media sites were promotion channels that served as a path between users and the poster's site.

It was straightforward — people would discover content on Facebook, Twitter, and LinkedIn, then click through to content (usually hosted on another site).

Today, social media sites are walled gardens. Algorithms have been rewritten to favor onsite content created specifically for that platform.

• The Hootsuite team found that posts without links had six times more reach than those with links.
• Elon Musk recently announced that verified account owners can now upload 2-hours videos on Twitter.
• The average organic reach on Facebook is only 5.2%.
• And Instagram, Pinterest, and TikTok's feeds are filled with more ads than ever.

Twitter Blue Verified subscribers can now upload 2 hour videos (8GB)! — Elon Musk (@elonmusk) May 18, 2023

The reason? These social media sites want to keep users on their platforms to earn ad income. Your branded content will have a harder time competing with other brands and paid ads.

Does that mean you should give up on social media? No, it won't do you any good because there's a brighter side to it.

Amazon used to be a great starting point for search, but our recent study says differently. 80% of marketers said consumers buy products directly from social media apps more often than brand websites.

So you don't need to give up on social media but start building your audience by publishing onsite content consistently.

Because as long as social media sites can monetize their traffic, they have no incentive to return to the old passthrough model.

Today, Facebook is a destination. Twitter is a destination. LinkedIn is a destination.

It's no longer enough to create content for your site, then schedule out promotions across channels that point back to that content — it'll only limit your reach, and you'll be stuck wondering why.

Savvy marketers know their ideas must be channel-agnostic and channel-specific.

As Alison Coleman , Zoom's Social media manager, says:

"We're excited to focus more on each social platform with its dedicated strategy, designing content to engage directly with in-feed.

The days of repurposing content are not necessarily over, but tailoring how we tell the same story on different platforms, to different audiences, with a different approach, is something we are excited to prioritize in our content."

Investing in product-related content has been a great help in boosting sales. She continues, "Product tips are a core part of our editorial calendar and what our audiences engage with most — but how we share this differs by platform."

To get the most out of a piece of content, its core concept must perform well across multiple channels, but marketers have to do more upfront work to create separate versions of this content to best suit the channel on which it's appearing.

Trend 3: It's getting more expensive to do marketing.

Search and social media titans have moved their goalposts to create a more competitive content discovery landscape. At the same time, barriers to entry on these platforms are getting higher in two ways:

1. Organic acquisition costs are rising.

SimplicityDX's recent study shows a 222% increase in customer acquisition costs in the last eight years in the ecommerce industry.

Why is this happening?

Ishaan Shakunt , founder of Spear Growth , shares it's not because of one or two reasons. Many things are happening in the background. He says, "It's difficult to understand why it's happening because calculating blended CAC isn't easy."

You can't measure organic and paid CAC combined (blended CAC), as evaluating both at a specific timeframe is difficult.

• Paid is simple — it stops working the moment you stop ads.
• Organic results are compounded, but they take considerable time.

So you can't estimate organic from when it started working or which campaigns brought results and compare it against paid. According to Ishaan, calculating paid CAC is easier — so let's go with this one.

He points out three main reasons why paid CAC is increasing, which also support our claims from above:

• Organic isn't performing well. A decade ago, organic used to work well. Brands could drive high traffic by placing a few keywords here and there — not anymore. Today, algorithms are intelligent, SEO is difficult, competition is higher, and SERPs have less space.
• Major social media platforms don't work anymore. Every five or ten years, we see this trend, a new marketing channel appears, it suddenly becomes all the rage, and when it's reached its height — saturated with many competitors — it stops working. Examples are Snapchat, Instagram, and TikTok.
• Market share is diversifying . Earlier, most market shareholders were top brands from industries. Small brands weren't considered. For example, Adobe Photoshop for photo editing. Today, the market share is evenly spread across multiple competitors — Adobe has many competitors, such as Canva, GIMP, and PicMonkey. The same is true for other industries.

To compensate for these changes, more companies are moving towards paid ads. They're now competing for paid rankings by bidding on keywords — resulting in paid CAC increasing.

2. Content marketers are commanding higher salaries.

It's not only harder to get value from content, but it's also getting more expensive to create it. Superpath examined the rise of content marketers' salaries by year — median salary has grown steadily.

In fact, senior marketing managers saw an average salary increase of 15.4% before inflation — changes in the content marketing profession partly explain this rise.

Google's changing algorithm requires more specialized knowledge than ever.

Not only are there specific optimization best practices to win featured snippets, but Google's current algorithmic model also favors sites architected using the topic cluster model.

Depending on the size of your site, this can be a massive undertaking — at HubSpot , it took us over six months to fully organize our blog content by this model.

Stand out in the market. Savvy marketers know that with AI, the quantity of content may increase, but the quality will decrease.

They're ready to increase their content marketing budget to produce human-generated, original content to stand out.

Trend 4: GDPR

The following is not legal advice for your company to use in complying with EU data privacy laws like the GDPR. Instead, it provides background information to help you better understand the GDPR. This legal information is not the same as legal advice, where an attorney applies the law to your specific circumstances, so we insist you consult an attorney if you'd like advice on your interpretation of this information or its accuracy). In a nutshell, you may not rely on this as legal advice or a recommendation of any particular legal understanding.

Eroding trust in businesses has much to do with how they used to collect their customers' personal information. 76% of consumers reported having no idea what companies do with their data.

It's not that consumers aren't aware of this — a whopping 79% believe it's essential for a company to protect customers' data to gain their trust.

That's why the General Data Protection Regulation (GDPR) passed by the European Union (EU) imposed new regulations on how businesses are allowed to obtain, store, manage, or process the personal data of EU citizens.

Businesses now need to state transparently what data they're collecting and why. And consumers can request businesses to delete their data at any time.

Did it have adverse effects? HubSpot CMO, Kipp Bodnar , doesn't think so; he says, "A privacy-first approach won't hurt your customer relationships. It'll transform them."

Want proof? Using HubSpot and Google's integration for a better privacy-first approach, Zoe Financial saw a 200% increase in revenue — it only enhanced customers' trust in the company.

Trend 5: It's difficult for customers to try the product.

The B2B industry needs much improvement because buyers don't have a frictionless experience when buying software. Let me share the insights from ChiliPiper's B2B Buyer Journey report.

Only 11% of companies have a calendar scheduler on their website. For most companies, their buyers don't have a direct way to book a meeting with sales teams.

Almost every B2B deal is made after one or more meetings with the company sales team, and by not having a meeting scheduler, these companies are elongating the sales cycle .

Only 17% of companies use interactive product demos on their website — which is one of the primary reasons why buyers hesitate to buy.

Buyers want to try the product on their own before buying it. They don't want to wait two days to hear back from the sales team to give them a product demo.

To back it up — a TrustRadius report shows product demos are the most helpful when making a purchase decision.

Companies need to find a way to make the buying experience seamless.

• They must show pricing on their website so buyers can understand their budget.
• They must include interactive product demos so buyers can try the product.
• They must include a calendar scheduler so buyers can book a meeting immediately.
• They must reduce the response time so buyers don't feel they're waiting forever.

In combination, these five trends mean that:

• It's harder to stand out on a crowded internet.
• It's more expensive to find talent and produce content.
• Algorithmic changes will force investment in a multichannel marketing strategy.
• Your website isn't doing a great job attracting and helping customers.

So it's getting harder to get prospects to your site, and when some do get on your site — you don't make it easy to move forward.

But for those few who do get in the door and schedule calls, closing them should be a standard operating procedure, right? Not quite.

2. Sales is more challenging.

Every year, HubSpot surveys thousands of marketers and salespeople to identify the primary trends and challenges they face. And year after year, salespeople report that their jobs are becoming more difficult.

HubSpot's study states that standing out from the competition is the top challenge for most salespeople.

Competition is fiercer than ever, and if you don't have unique features/values, it's difficult to keep prospects engaged throughout the sales process.

It's not entirely the salespeople's fault, though — the market is saturated more than ever. With new companies launching daily and features getting replicated, it's difficult for salespeople to stand out, and they struggle to get attention.

Prospecting is the most challenging part of the sales process. Salespeople reported spending 12+ months researching a prospect to understand their pain points better.

Another problem is the contact method salespeople are using. Prospects don't want to be cold-called out-of-the-blue; they want their sales agents to build relationships with them.

New LinkedIn research suggests warm calling is one of the best ways to engage with buyers. As a result, salespeople (75%) spend more time researching prospects.

But keeping tabs on different prospects can become challenging when you're doing it on a scale, especially when you're not using a CRM to track everything.

The key is to strike a balance. Peter Mollins , CMO of SetSail , says:

"Cracking into having a meaningful conversation with your prospect when the market is blaring at them is incredibly difficult.

And that's why it's so vital to engage prospects on their terms: reaching them when they're ready, in terms they care about, that are impactful, clear, and concise."

It keeps getting worse for salespeople.

Because decision-makers of companies keep changing frequently. A G2 report reveals that 68% of salespeople experienced decision-makers changing multiple times during the software buying process.

The amount of time, effort, and research salespeople put into building a healthy relationship with a prospect becomes vain just because decision-makers change.

Now, they must start from scratch, which elongates the sales cycle.

The same study shows that people want salespeople to show more involvement in the research phase, but they show up only in the buying phase.

Somehow, salespeople fail to understand where their prospects need their help. And since the help isn't provided correctly, buyers rely on self-research, influencer recommendation , and their networks for an opinion.

But, it's not salespeople only — it's also consumers. People are more impatient than ever, as if they don't want to take their sales agent seriously.

Salespeople reported having 10-15% of sales calls where people weren't interested.

Diana Stepanova , the Operations Director from Monitask , shares:

"A small percentage of prospects exhibit impatience or rudeness. It's not uncommon for prospects to become frustrated if they're short on time or their needs are not being met promptly."

Salespeople must remain patient while dealing with prospects.

Diana continues, "A sales expert needs to maintain professionalism and apply empathy to understand the underlying cause of this behavior. Often, these prospects have dealt with poor customer service in the past or are under significant pressure, leading to an emotional reaction."

The inherent distrust of the profession is diluting salespeople's influence in the purchasing process and making your acquisition strategy less and less reliable.

It's scary, but there's a bright side. Within the pain of change lies opportunity, and your business boasts a huge, overlooked source of growth you probably haven't invested in — your customers.

When you're growing a business, two numbers matter more than anything else:

• How much it costs to acquire a new customer (or CAC)
• That customer's lifetime value — how much they'll spend with you over their lifetime (or LTV)

For many years, businesses focused on lowering CAC. Inbound marketing made this relatively easy, but the new rules of the internet mean this is getting harder.

As Google and social channels tighten their grips on content, the big opportunity for today's companies is raising LTV.

If your customers are unhappy, you might be in trouble. But if you've invested in their experience, you're well-poised to grow from their success.

When you have a base of successful customers who are willing and able to spread the good word about your business, you create a virtuous cycle.

Happy customers transform your business from a funnel-based go-to-market strategy into a flywheel. Through promoting your brand, they're supplementing your in-house acquisition efforts.

This creates a flywheel where post-sale investments like customer service feed "top of the funnel" activities.

The flywheel explains how you gain momentum from delivering a remarkable customer experience that produces happy customers who send you referrals and repeat sales.

Buyers trust people over brands. Do you know how much? A MarketingChart report says 1 in 4 people buy based on influencer recommendations.

And brands are getting crowded out of their traditional spaces, so why throw more money at the same go-to-market strategy when you could activate a group of people who already know and trust you?

Isn't it easier to turn customers into your brand's advocates ?

Think about it this way — by your customers promoting your brand, you're doing free marketing without appearing salesy or pushy. It's a win-win.

Customers are a source of growth you already own and a more natural and trusted way for prospects to learn about your business.

The happier your customers, the more willing they are to promote your brand, the faster your flywheel spins, and the faster your business grows. Not only is this right for your customers, but it's also a financially smart thing to do for your business.

At some point, your acquisition math will break.

Businesses are moving to a recurring-revenue or subscription-based model. It means customers pay a monthly fee for membership or access to products.

The recurring revenue model makes it easy to project expected revenue over a set time. Understanding how money moves in and out of business makes headcount planning, expansion planning, and R&D efforts easier.

But it doesn't matter if your company is subscription-based; a recurring revenue model contains lessons that apply to all businesses. Before we dive in, there are three core assumptions this model relies on.

First, every business has a defined total addressable market, or TAM. Your TAM is the maximum potential of your market. It can be bound by geography, profession, age, or other factors, but generally, every product serves a finite market.

Second, every company aims to create repeat customers — not just subscription-based ones. Below are examples of businesses that benefit from recurring revenue, even if it's not formalized through contracts or subscription fees:

• A beauty products store where customers typically purchase refills once every three months.
• A hotel chain that becomes the default choice for a frequent traveler.
• A neighborhood restaurant that's cornered the market on Saturday date nights.

Third, the key to growth is to retain your customers while expanding into the portion of your TAM that you haven't won yet.

Let's understand why a subscription-based model is valuable using an example. Suppose there's a company called Minilytics, Inc.

Minilytics starts with a customer base of 10 people and a churn rate of 30% — meaning three of their customers will not buy from them again. Each of Minilytics' salespeople can sell five new customers per month.

Because of Minilytics' small customer base, they only need to hire one salesperson to grow.

Fast forward several months, and Minilytics now has 50 customers, 15 of whom churn. To grow, Minilytics' CEO has to bring on three more salespeople, meaning they have to pay additional salaries.

You can see where this is going. At 100 or 1,000 customers, Minilytics' CEO cannot hire enough salespeople to grow. The cost of paying staff to maintain a business losing 30% of its customers will shutter most businesses.

But there's more. While Minlytics struggles to plug the leaks in its business, something else is happening that will tank the company — even with an army of salespeople.

Remember TAM? While Minilytics' CEO was hiring salespeople to replace churned customers, the company was also rapidly burning through its TAM.

Generally, customers that churn do not return because it's hard enough to gain a consumer's trust. To break trust through a poor experience, then try to rebuild it is nearly impossible.

Even if Minilytics can afford an expanding sales team, it's been rapidly churning through its TAM. Eventually, Minilytics will run through its entire total addressable market, and there will be no room to grow.

Luckily, Minilytics is just an imaginary company. Let's rewind to that first month and explore what they could have done differently.

Building a good customer experience is the foundation of growth.

Growing a sustainable company is all about leverage.

If you can identify the parts of your business model that require lots of effort but provide little reward, then re-engineer them to cost you less effort or provide more reward, you've identified a point of leverage.

Most companies hunt for leverage in their go-to-market strategy, which usually involves pouring money into marketing or sales efforts.

Customer service, customer success, customer support — or whatever you call it (at HubSpot, we have a separate team dedicated to each function, but we're the exception) — has traditionally been viewed as a cost center, not a profit center.

And it's not hard to understand why. The ROI of sales and marketing investment is immediately tangible, while investment in customer service is a long game.

But most companies mistakenly try to optimize for fewer customer interactions, so issues are left unaddressed. Because they're thinking short-term, it costs them in the long term.

Too many businesses think once a sale is made and the check's cleared, it's on to acquire the next new customer.

That doesn't work anymore. The hardest part of the customer lifecycle isn't attracting their attention or closing the deal — it's the journey that begins post-sale.

A Gladly report on customer expectations states that 40% of buyers would stop buying from a brand after two bad customer experiences.

The same report says that 59% of customers would recommend a brand to their friends because of its customer service.

Once your customers are out in the wild with your product, they're free to do, say, and share whatever they want about it.

Coincidentally, that's when many companies drop the ball, providing little guidance and bare-bones or difficult-to-navigate customer support. This approach, quite frankly, makes no sense.

Think about it this way:

• You control every part of your marketing and sales experience.
• Your marketing team carefully crafts campaigns to reach the right audiences.
• Your sales team follows a playbook when prospecting, qualifying, and closing customers.

Those processes are needed — because they're a set of repeatable, teachable activities you know lead to consistent acquisition outcomes.

Once a customer has your product in their hands, one of two things will happen: They will succeed or not.

If they're a new customer or first-time user, they might need help understanding how to use it. They would want to learn from others who have used your product or want recommendations on how best to use it.

Regardless of what roadblocks they encounter, one thing is sure: There's no guarantee they'll achieve what they want — this is a gaping hole in your business.

• No one is better positioned to teach your customers about your product than you.
• No one has more data on what makes your customers successful than you.
• And no one loses more from getting the customer experience wrong than you.

Let me say that again: Nobody has more skin in this game than you.

40% of respondents said they'd stop buying from a company because of a poor customer experience. If your customers are dissatisfied, they can — and will — switch to another provider.

Few businesses today have no competitors. Once you lose a customer, you'll not get them back. If you fail to make your customers successful, you'll fail too.

But if you help them achieve their goals with exceptional customer service, they'll recommend you to their friends. They'll get you more customers.

Not convinced? Hear it straight from buyers.

Diana Stepanova from Monitask shares her positive experience with a customer service team of a SaaS product she purchased:

"I would undoubtedly recommend this onboarding team to my friends and colleagues, as their exemplary service made a massive difference in my overall experience. In fact, I would be more than happy to share my positive encounter with others as frequently as the opportunity arises."

Still not convinced? Let's take back our example and understand how to best allocate money between marketing, sales, and customer service.

Consider Minilytics and Biglytics (competitor) with a CAC of $10 and a budget of $100.

Minilytics hasn't invested in a well-trained customer service team, so their churn rate is 30%. Three customers churn, so they spend $30 replacing them. The remaining $70 is spent on acquisition, ending with 17 customers.

At Biglytics, things are different. Customer service isn't the biggest part of the budget, but the team is paid, trained, and knowledgeable enough to coach customers who need help.

Because Biglytics has proactively spent $10 of its budget on customer service, its churn rate is much lower, at 10% (a churn rate of 10% is actually terrible — we just chose it to keep numbers simple).

Biglytics replaces their single churned customer for $10 and spends the remaining $80 on eight new customers, netting out at 18 customers.

A one-customer difference doesn't seem significant. But that $10 Biglytics invested in their customer service team has been working in the background.

Customers they brought on last year succeeded with the product because of excellent customer service. These happy advocates kept talking about Biglytics to their friends, family, and colleagues.

Through referrals and recommendations, Biglytics brings on five more customers without extra work from the sales team.

This means Biglytics has brought on six more customers than Minilytics in the same period and reduced their average CAC to $7.14.

Which company would you rather bet on? I'm guessing it's Biglytics.

That's why investing in customer service is so powerful. When you see the whole picture, you discover more opportunities to grow. You'll find it costs 5 to 25 times more to acquire a new customer than to retain an existing one.

Prioritizing short-term growth at the expense of customer happiness is a surefire way to ensure you'll be pouring money into the business just to stay in maintenance mode.

The 4 Points of Leverage in the Customer Experience

A good customer experience goes beyond hiring support staff — it starts pre-sale. The four points of leverage are where you can start working today.

1. Pre-sale: Understand customer goals.

People buy products to fix a problem or improve their lives — to get closer to an ideal state from their current state. Your job is to help them get there.

Depending on what you sell, much of the work required to make your customers successful might not be done until post-sale through coaching and customer support.

But if you understand your customers' common goals, you can reverse-engineer your acquisition strategy.

Emily Haahr , head of support and professional services at Plaid , explains how this works:

"Your best customers stay with you because they get value from your products. Dissect your most successful customers and trace back to how they found you in the first place.

What marketing brought them to your site? What free tool or piece of content converted them to a lead? What type of onboarding did they receive, and with whom? What steps did they take in onboarding? And so on…

Once you have this information, you can identify and target the best fits for your product earlier, then proactively guide your customers down a path of success instead of trying to save them once they've reached the point of no return."

2. Pre-sale: Make it easier for your customers to buy.

Determine if your sales process could be easier to navigate. Today, buyers don't want to talk to a salesperson or pay money before they know how well a product works. You should empower them to do so.

Can you give away part of your product or service so prospects can try it before they buy? This way, they'll qualify themselves and learn how to use your product before you ever have to raise a finger.

Anecdotally, HubSpot has seen the most rapid growth in our acquisition through self-service purchases.

Also, evaluate what parts of your marketing and sales process can be automated. Can you add a calendar scheduler to make it easier for buyers to book product demos when they want?

The more you can take off your marketers' and salespeople's plates, the better you'll give your buyers more control over their purchases.

This change is already happening. Think about Netflix, Spotify, and Uber. All three companies disrupted industries with difficulty built into their go-to-market.

• People wanted to watch movies but didn't want to pay late fees. Hello, Netflix.
• People wanted to listen to music but didn't want to pay for individual songs or albums. Hello, Spotify.
• People wanted to be driven between Point A and B but didn't want to wait for cabs in the rain. Hello, Uber.

Today's biggest disruptors got to where they are by disrupting inconvenience. Hurdles are the enemy — remove as many as you can.

3. Post-sale: Invest in your customers' success.

At HubSpot, we believe in earning success by investing in customers' success. That's how we've helped Shore and thousands of other businesses achieve incredible results.

I scaled the HubSpot customer service team to over 250 employees, and we've found a few things that help us make our customers happier. I'm sharing them here so you can too:

Gather feedback — NPS® or otherwise.

As early as possible, start surveying your customer base to understand how likely they are to recommend your product to a friend. You can also send post-case surveys to customers whose issues your team has helped resolve.

At HubSpot, we track Net Promoter Score (NPS) maniacally — a company-level metric we all work toward improving. It helps us:

• Identify holes in our customer service early.
• Track customer sentiment over time (the trend of NPS is more valuable than one raw number).
• Quantify the value of customer happiness — when we changed a customer from a detractor to a promoter, the LTV increased by 10-15%.

Start small with a post-support case NPS to determine if immediate issues were resolved. From there, you can build up a quarterly or monthly NPS survey of your customer base that focuses on their general experience with the product.

Build up a lightweight knowledge base.

Self-service is the name of the game. Identify your most commonly asked customer questions or encountered issues, then write up the answers into a simple FAQ page or the beginnings of a searchable knowledge base.

This enables your customers to search for their solutions instead of waiting on hold to get human support. It takes work off your team's plate as a bonus.

Over the years, HubSpot built a vast library of self-service resources that helped customers and helped us retain them longer.

4. Post-success: Activate happy customers into advocates.

Once you have happy and successful customers, it's time to put them to work for you.

Buyers report they check review sites when making a purchase decision. They're listening to your customers, not you.

Use your customers as a source of referrals and social proof for your business through testimonials, case studies, references, and brand amplification.

The key to successful customer advocacy is not asking for anything too early. Don't try to extract value from your customers until you've provided value — asking for five referrals a week after they've signed a contract is inappropriate.

Your primary goal should always be to make your customers successful. After you've done that, you can ask for something in return.

Putting It All together: The Inbound Service Framework

At HubSpot, we've made many mistakes but learned even more about how to build a repeatable playbook for leading your customers to success and eventually turning them into promoters.

We call it the inbound service framework.

Step 1: Engage

Good customer service is the foundation — that's why "Engage" is the first part of this framework. At this stage, your only concern is understanding and resolving the customers' questions.

Cast a wide net when you're just getting started. Engage with any customer, wherever, about whatever they want. Be on all channels, solve all problems that come your way, and help anyone who needs it.

Above all, make sure you're easy to interact with.

At HubSpot, we found that customers who submitted at least one support ticket a month retained at a rate around 10% higher than customers who didn't and were 9-10 times more likely to renew with HubSpot year after year.

Not getting support tickets does not mean your product has no issues — every product does. It just means your customers are suffering silently.

With time, you'll refine your approach, but this initial operating system helps you gather lots of data rapidly. At this stage, your objective is to learn as much as possible about the following:

• FAQs requiring customized guidance
• FAQs that can be addressed with a canned response
• Most confusing parts of your product/service
• When support issues arise, do people require implementation help or encounter issues three months after purchase?
• Commonalities of customers who need the most help
• Your customers' preferred support channels

This data will enable you to identify leverage points in your customer service motion.

For example, if you find that 30% of customer queries have quick, one-and-done answers ("How do I change my password?", "How do I track my order?", "What is your return policy?"), stand up a simple FAQ page to direct customers to.

Boom — you've freed up 30% of your team's time to work on more complicated, specific issues.

Empower your customer team to make noise about the problems they see, early and often, and turn their insights into action.

Are your sales and marketing teams overpromising? Your customer team will hear these complaints first. Trace the points of confusion back to their origin, and change your sales and marketing messages to reflect reality.

Is there something about your product that causes mass confusion? Your customer team will know which parts of your product/service are most difficult to navigate and why. Use this information to improve your product/service, eliminating these problems at the source.

Do certain types of customers run into issues frequently? Do they usually churn or require extra love to get over the hump?

• If it's the former, build an "anti-persona" your sales and marketing teams should avoid marketing and selling to.
• If it's the latter, dive into that cohort of customers to understand whether their lifetime value justifies the extra help they need.

As you learn more about your customers, you'll find new ways to refine your process.

Identify your team's most effective support channels and create an excellent experience for those, then establish a single queue to manage all inquiries.

In this stage, measure success by how fast you solve problems and post-case customer satisfaction. You can do the latter through a post-case NPS survey, which gives instant feedback on your customer team's effectiveness.

Step 2: Guide

In the "Guide" stage, focus on turning your customer relationship from a reactive, transactional model into a proactive partnership.

It's time to transform your customer team from a supportive function into a customer success-driven organization.

(The reactive part of your customer service organization will never go away. But as you grow, it should become part of a multifunctional group.)

What does it mean to be proactive?

First, it means anticipating common issues and challenges and building resources to prevent them. This includes a knowledge base or FAQ and re-engineering parts of your offering to be more user-friendly and intuitive.

Second, it means partnering with your customers to help them get to their stated goals. Guide them through critical milestones, provide tasks to keep them on track, and connect them with peers so they can crowdsource answers if necessary.

Create frameworks and tutorials where you can.

It's better to be proactive than reactive for a few reasons:

• It saves time, and time is money. Imagine the time you'll save your support team if you can get repetitive queries off their plates, which can be spent on complex, higher-level issues revealing even larger leverage points in your business.
• It makes your customers happier. Even if you can resolve issues at a 100% success rate with 100% satisfaction, you've still built an experience filled with roadblocks. Aim to build a world where you've anticipated and solved your customers' challenges at their source.
• It builds a trusting relationship. Buyers are more likely to trust a company that rarely lets them down over a brand constantly scrambling to fix the next issue.
• It's a competitive advantage. Proactive guidance makes you extremely knowledgeable about your customer's weakest pain points which can be used as a core part of what you're selling, even if it's positioned as customer service.

As you move from reactive support into proactive guidance, you become a teacher, not a vendor. Other companies might be able to build a product as good as yours, but it'll be hard to replicate the trust you have with your customers.

Guidance is an iterative process. As in the early days of your customer organization, collect as much data as possible on the customer lifecycle and continuously update your guidance to reflect current best practices.

Pay attention to the best formats and channels, which issues have the highest impact on your customers once solved, and update your process accordingly.

Step 3: Grow

Happy customers want to support the businesses they love. They refer their favorite brands to friends and purchase again from the same brand.

Your happy buyers want to help you. That's what the "Grow" stage is all about — turning that desire into action.

"There are three ways to activate your customer base into promoters," says Laurie Aquilante , HubSpot's director of customer marketing: "Social proof, brand amplification, and referrals." Let's review each play.

1. Social Proof

Buyers are more likely to trust and do business with companies their networks trust. The following are all different ways your customers can create social proof for your product:

• Sharing positive experiences on social media or review sites
• Providing referrals (more on this later)
• Testimonials/case studies
• Customer references in the sales process

"Activating social proof is all about keeping a close watch on your customers. It's also not a pick-one-and-done kind of thing," Aquilante says. "For example, case studies and customer references are helpful at different points in your sales motion."

While you could use the same customer for both, having customers who can speak to diverse experiences is more beneficial.

Encourage social proof by proactively reaching out to your most satisfied customers. You can also provide incentives for sharing content or writing online reviews.

2. Brand Amplification

When someone shares your content on social media, helps contribute content for a campaign, or interacts with it, they amplify your brand.

"To make this happen, you must provide a 'what's in it for me?'" Aquilante says.

"Either create such engaging content and be so remarkable that your customers can't help but amplify your message, or provide an incentive, like points toward future rewards or something more transactional, like getting a gift card for sharing content a certain amount of times."

3. Referrals

Referrals have the most immediate monetary value for your business. B2C companies are masters at the referral game, awarding the referrer credit to their account or even monetary rewards.

B2B referrals are trickier. B2B purchases tend to be more expensive than B2C, involving multiple stakeholders and a longer sales process.

So your customer likely has to do some selling upfront to feel comfortable sending a contact's information to you.

It's not impossible to get this right, but offering your customer something valuable enough to incentivize them to do this work on your behalf is crucial.

"Get in your customer's head, figure out what matters to them, and make sure that you've got a good exchange of value," Aquilante says. "They're offering you something of very high value if they're referring your business, and you've got to offer something in return."

4. Upsells and Cross-sells

A note from our lawyers: These results contain estimates by HubSpot and are intended for informational purposes only. As past performance does not guarantee future results, the estimates provided in this report may have no bearing on, and may not be indicative of, any returns that may be realized through participation in HubSpot's offerings.

Aside from promoting your brand and bringing you business, your customers are also a source of net new revenue if you have multiple products or services. Your customer team is your not-so-secret weapon in unlocking this revenue.

In late 2017, HubSpot piloted the "Support-Qualified Leads" concept at HubSpot.

Our sales team owns selling new business and upselling/cross-selling those accounts.

But our support team is the one speaking with customers daily, so it's just intuitive that they have a better understanding of when customers reach a point where their needs grow past the products they currently have.

When a customer has a new business need and has the budget to expand their offerings with HubSpot, a customer success representative passes the lead to the appropriate salesperson, who takes over the sales conversation.

The Support-Qualified Lead model is powerful because it closes the communication loop between sales and support.

In its first month, the pilot generated almost $20,000 in annual recurring revenue from cross-sells and upsells. Since we've rolled this out, we've generated over $470,000 in annual recurring revenue from this model — nothing to sneeze at.

Start Optimizing Your Customers' Experience Today

Growth has always been challenging. If you're just starting, it's hard to imagine ever competing with the top companies in your industry.

Customer service is the key to this equation.

If you provide an excellent customer experience and can create a community of people willing to promote your business on your behalf, you're laying the groundwork for sustainable, long-term growth.

And in a world where acquisition is getting more complicated, who wouldn't want that?

This post was originally published in May 2018 and has been updated for comprehensiveness.

Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

Don't forget to share this post!

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13 Winning Customer Acquisition Examples

Customer acquisition examples.

Night’s fallen but the big man refuses to stop driving. His blonde companion is asleep in the front seat, quietly snoring into his flannel. Since leaving Sandusky, Ohio, they’ve been on the road for almost a month.

Their mission is critical.

If they don’t scare up some new business, it’s the end. They need to reach Minnesota before daybreak to keep schedule and make their sales meeting. His determined grip on the wheel reflects the determination of Tommy Callahan himself.

He’s not sure how he’s going to convince them, he just knows he’s going to. He’s going to acquire one customer after the next because he needs to raise money and save father's auto parts factory. All he’s got going for him is his good will, his family name, and his drive to succeed.

Why am I rehashing the storyline to the 1995 movie Tommy Boy?

Yes, because Chris Farley is hilarious. But also because customer acquisition sometimes feel like driving in the dark, like you’re not sure what’s going to work - you just know it needs to work. And you know you’re going to make it happen one way or the other.

And kinda’ like Tommy Boy, brands must put their best foot forward with customers and hope for the best. Nonetheless, digital marketing takes more than a road trip and a good story.

It takes a multi-channel strategy with effective messaging at every touchpoint. But as Chris Farley and David Spade showed us, a solid brand story and persistent efforts will convince the audience that yes, you are the one to do business with.

Now, let’s take a ride through 13 winning customer acquisition examples from leading software and retail brands. Take heart and take ideas from these proven ways to engage customers, convert new buyers, and drive revenue.

#1 Influencer Marketing - H&M

For the fast-fashion retailer H&M , pairing up with TheWeeknd was a power move. The brand’s Instagram takes a full-page spread out to promote their affiliation, effectively showcasing their clothing both on and off the superstar singer.

H&M’s youthful messaging aligns perfectly with the singer's name, which no doubt reaches the ears and hearts of many a shopper. Here’s a prime example of smart influencer marketing alignment masterfully executed and to great effect (50k+ likes per post). Because consumers trust influencers, this massive-scale effort is sure to bring in some new business.

The takeaway here is that influencer marketing can be a great way to reach an audience of potential customers as long as you make sure your message aligns with the influencer’s own brand. Influencers have cultivated relationships and earned followers, so it makes sense to use them in customer acquisition strategies. Reaching out to the right people could just be the key to unlocking a treasure trove of loyal customers.

#2 Live Website Chat - ASOS

British mega-retailer ASOS uses their live chat in an appropriate, impressive fashion. With stylists standing by, website visitors can inquire about fittings, sizes, colors, and the best way to match an outfit.

While customers feel appreciated and enjoy a surpassing brand experience, the company reaps higher profits from helping more visitors get into an outfit that works for them. Using the stylist's name is clutch, as is posting a thumbnail and asking for the upvote/downvote at any time. Would-be customers and returning customers alike are sure to appreciate such features.

The ultimate benefit of a live chat feature is the ability to immediately address customer concerns and questions. This helps to increase conversion rates by reducing cart abandonment. By providing quick, helpful answers, customers are more likely to complete their purchases in an efficient manner. In addition, customers may be able to identify any issues they’re having with the product or service, allowing the company to address them before they become a major problem.

#3 Advocacy Lists - Lululemon

Lululemon makes good with their Instagram page by asking customers to share actual photos of themselves in their gear. This campaign succeeds because it’s built from the active brand lifestyle, showing viewers that the sportswear brand is great for both exercise and casual use.

Using brand advocates and user-generated content is a great way to engage customers, reinforce brand loyalty, all while recommending the brand to social media onlookers. Social proof? Check. Clean design with relevant repurposing on the website? Check. That’s customer advocacy done right.

Advocacy lists are an effective tool to acquire customers. They’re a valuable resource for existing customers that you can use to reach out to people who may not have heard of your product or service yet. Think of it as a list of your most dedicated fans – those who already love and use your product, and are willing to act as brand advocates to their friends and family.

#4 Email Automation - Sephora

In an automated effort to engage their email list, cosmetics company Sephora brand reroutes a sweepstakes offer through their Instagram. Who wouldn’t want a free trip to Paris with a pal? It’s smart to pull viewers from email into IG, therefore increasing engagement across platforms and helping to promote the brand.

A nod of the head for making this email very actionable, including a bold, pink CTA for easy access and fun, playful visuals that communicate the playful possibilities and brand messaging. Extra kudos for siding with influencer Megan Hess and name-dropping AIR FRANCE for added pull. Customer acquisition can be fun, as this sweepstakes shows.

Email automation is the practice of using software platforms to leverage email campaigns in order to reach customer goals. This could range from sending automated emails in response to a customer’s actions or even setting up automated campaigns that are triggered on certain dates or times.

With an effective strategy, businesses can generate more sales and engagement, personalize messages for customers, and even generate leads. Email automation is a great way to ensure that your campaigns are reaching the right people at the right time.

Speaking of email automation, we have a great article on How to Create Powerful Email Automation Tracks .

#5 PPC Advertising - Eloqua

Eloqua definitely knows their target audience. For B2B readers like you and moí, we see “Best Practices & Case Studies” and start to drool. Well...assuming we’re top of funnel.

Which we are while searching on Google, so “Find” is the right word to start with. To help the software brand increase awareness and consideration among viewers, a hyper-linked bullet list of benefits is provided as are additional values in grey. “Get Started Now!” is well placed at top right, so it stands out as the last text the eye finds on a scan.

With PPC advertising you can break through the noise and draw attention to your product or service, no matter how crowded the market. Pay-per-click (PPC) is an online advertising model that allows you to pay only for what you need, when you need it. It’s focused and cost-effective, meaning you don’t have to guess or waste time on ineffective campaigns that go nowhere.

#6 Twitter Advertising - Hubspot

Taking a compassionate angle, Hubspot promotes their new Hubspot Academy to marketers like us. It’s smart: we know that customer “love” is what drives sales, nets conversions, engagement, and guarantees retention.

Aside from the cutesy imagery, the copy really makes this Twitter ad work. Words like “start,” “learn,” and “get” all drive action while choice words like “free” and “certification” compel viewers to click. Because love, like free and seemingly exclusive certifications, is a terrible thing to waste.

Twitter Ads are a great way to drive customer acquisition and secure more leads. But in order to be effective, you must craft your ad copy with the same love that customers put into making purchase decisions. Be sure to use actionable words and entice viewers with free offers or exclusive certifications. Show them that your brand is worth their time and attention, and you’ll be sure to make a lasting impression. A good Twitter ad is like a box of chocolates: sweet, thoughtful, and delicious.

#7 Behavioral Email - Amazon

Leave it to Amazon to do something clever with their behavioral email. This follow-up message arrives after a Kindle purchase and prompts the customer to review their product.

This simultaneously signals customer appreciation while pulling the reader back in for future purchasing. How so? By clicking the actionable, yellow CTA we’re taken back to the Amazon website and reconnected to the massive online marketplace that got us here in the first place. Buying time, round two!

But Amazon isn’t the only one using behavioral emails to their advantage. Brands from all industries have caught on to this tactic and are leveraging it to keep customers engaged with their products, services, and content.

Behavioral email has become a fantastic way for businesses to personalize each customer's experience. When done right, customers will be more likely to take action and come back for future purchases. After all, who doesn't want a personalized shopping experience?

A tailored message based on the products and services purchased - that’s a surefire way to keep customers engaged in the process! Now go forth and conquer your customer acquisition game with some cleverly crafted behavioral emails! You won’t be disappointed.

#8 Referral Marketing - Tile

Location-service app Tile shows how to make referrals easy as cake. The brand makes sharing a referral link with friends a one-click process with those bright and familiar social buttons.

The copy beneath draws us in with a question and immediately appeals to our altruistic characters with “Help” oriented-copy that speaks to the benefits of  double-sided rewards.

Tile does a great job of using a simple points structure for users and showing us how many points we need to earn before getting  a reward - which encourages shares. Acquiring customers is much easier when using existing customers as brand ambassadors. This way, we can all have our cake and eat it too. The best part? Referral programs don’t have to be complicated. Just keep it simple and make sure to communicate a compelling offer like Tile does. Everyone wins!

The bottom line is that referral marketing can be a powerful way to acquire customers and increase brand awareness. By incentivizing existing customers, you can create a steady stream of referrals and organic leads while providing incentives for both the referrer and the friend they referred. It’s a win-win situation for all!

So get out there and start making your own referral marketing campaigns today. You never know who may be the next big advocate for your brand – and how much they can help you grow!

#9 Content Upgrade - Pardot

Readers of Pardot’s article “ How to Win at Lead Nurturing ” finish the article and find the actionable next step waiting for them. Yes, the complete guide full of campaigns to try is a relevant and practical extension of the theory presented in the blog post.

How could a reader who got value not want to swap an email for 10 nurture ideas and a total guide? The inspirational picture uses plants in ascending order to symbolize growth, the loyal blue of the company itself, and an exciting orange to attach to the “Free” e-book. Overall, a super-compelling and visually rewarding content upgrade that’s sure to fill the funnel.

But why stop there? How about an interactive quiz or a mini-course with helpful video tutorials to help your readers hit their goals? These content upgrades make it easy for readers to stay engaged and keep coming back for more. With the right offer, you can make sure that every visitor gets something valuable in exchange for their contact information. And for you, that means more leads and higher conversion rates. Now that’s what we call a win-win!

#10 Skyscraper Content - Unbounce

Which would you rather read?

If you’re like the rest of the internet (note the social counters), you’ll opt for the skyscraper blog post by Unbounce rather than from Blue Fountain Media.

Why? The title promises way more value to the reader, giving us an exact method to acquire more customers rather than 5 “inspiring” elements to drop into our about page.

The image is ironic and also draws you in way more than a basic two-color stock photo. I’ll choose to read about netting customers over getting inspired nine times out of ten - and my guess is you’d do the same. To skyscrape stellar content, spend a few minutes on Buzzsumo or hit a few web searches. Then take the elevator all the way up!

#11 Facebook Advertising - Warby Parker

Warby Parker has a good eye for Facebook retargeting ads. After some good ol’ fashioned cart abandonment, this sponsored post shows up to remind us that it’s time to buy.

The online eyeglass retailer uses some punny and funny copy to soften the message while making a timely reference to the winter season.

Facebook readers respond well to messaging that uses an informal, branded tone and references contemporary events. After all, some of us spend way too much time on that newsfeed. Ahem...

When it comes to snagging new customers, nothing beats the power of a well-crafted Facebook ad. Make sure you’ve got your A game on when crafting yours. And don’t forget: There’s plenty of humor to be mined from everyday life that can help make your ads truly stand out from the crowd!

#12 Web Push Notifications - Beyond the Rack

Web push notifications are a fairly recent phenomenon, but like mobile push notifications before them, they require a delicate touch to do right.

Online apparel brand Beyond the Rack delivers a value-laden message here, putting it’s best foot forward with “Free” and then reminding us of all the great brands that we can save on now!

Because push notifications are permission-based, it’s best to limit messaging to time-sensitive and beneficial matters only - or you might lose your spot on the desktop.

So if you’re looking to acquire new customers and keep them around, web push notifications are a valuable tool that can help you do just that! Just remember to be thoughtful with your messaging – customers will appreciate it and reward you with their loyalty.

#13 About Page - MailChimp

MailChimp has a fun and evocative “About Us” page. More like a blog than a boring story, this part of the website screams personality while maintaining a brand-specific tone and conversational style.

It’s pretty genius: those looking to get a bit more info end up finding stories, added benefits, and a completely unexpected brand position. If visitors were trying to make up their mind between two indistinguishable email platforms, this page will very likely bring them towards MailChimp.

In other words, the About page is a great tool to use to acquire customers. It’s an invitation to join the crowd and become part of the MailChimp family.

Plus, it's a lot more fun than a boring “About Us” section! So why not make your own? Let your customers, prospects, and haters know who you are in a way that’s easy to read, entertaining, and on-brand. You never know when an About page can create the connection between your business and a potential customer.

Roll Credits

Hopefully these 13 examples of customer acquisition strategies have shown you how to be your own brand hero and save the company every time. And in case you didn’t see the movie, the answer is yes: Tommy Boy saves the day. After all, it’s a 90’s comedy flick.

How to reach customers is always evolving in marketing, but as long as you’re staying focused on delivering succinct and valuable messaging, you will succeed. We’ve seen these brands use concise, actionable copy every time. They have great visual appeal, use consumer psychology, and create a customer-centric experience from the outset.

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5 effective customer acquisition strategies to attract and convert more customers

To scale and sustain any online business, you need a steady stream of new customers. 

But it’s not enough to simply make up the numbers: to guarantee long-term customer satisfaction and retention, you need to ensure your marketing efforts are reaching (and appealing to) the right people.

Last updated

Reading time.

With a little know-how and a lot of customer research, you can create a customer acquisition strategy that attracts, engages, and delights the best customers for your business . 

Read on to learn about five customer acquisition tactics that help you drive sustainable growth, along with actionable tips on how to implement them.

Improve your customer acquisition strategy with data-driven insights

Enrich your acquisition strategy with real user data from Hotjar to empathize with your users and acquire more right-fit customers.  

5 winning customer acquisition strategies 

A customer acquisition strategy is a plan to bring new customers to your business. It usually involves a mix of techniques and methods to help you attract, engage, and convert users into paying customers.

Here are five customer acquisition strategies to try today.

1. Customer research

What it is: customer research is the process of collecting data and insights that help you deeply understand your target audience—and empathize with their experience.

How it helps with customer acquisition: when it comes to acquiring the right-fit customers, knowledge is power. Understanding your target audience is the number one strategy to get and retain more customers, and should underpin everything else you do.

Use product experience insights platforms like Hotjar (that’s us!) to connect the dots between what people do on your site and why , so you can combine quantitative and qualitative data to create a more compelling customer acquisition strategy. Look for platforms with customer research tools such as:

Recordings : watch video playbacks of your customers’ full journey to experience your website as they do

Heatmaps : see exactly where users scroll, click, scroll, and engage (or don’t)

Feedback and surveys : get in-the-moment feedback with a widget (like the red ‘Feedback’ button on the right of this page 👉), or send targeted surveys to specific user cohorts to learn more about what they love or hate

Interviews : run user interview and research sessions to connect with the right people and get deeper insights

Use your customer research to fuel every other strategy on this list, from supercharging your email marketing to helping you create content and assets that really resonate.

Three tips for using customer research to acquire customers:

2. Search engine optimization (SEO)

What it is: search engine optimization (SEO) is the process of improving your site so it ranks better in search engines like Google.

How it helps with customer acquisition: improving SEO is one of the best ways to increase organic traffic to your site, meaning you can bring more visitors to your business (and hopefully acquire more customers) without needing to spend a fortune on paid advertising.

Three tips for using SEO to acquire customers:

📚 Further reading: check out our guide to 13 common SEO website issues and how to solve them .

3. Content marketing

What it is: content marketing is the process of creating and sharing content (like this blog post 🤓) that helps you acquire, engage, and persuade people to become paying customers.

How it helps with customer acquisition: use content marketing at every stage of the customer acquisition funnel (awareness, consideration, conversion, and retention). For example, you could: 

Use an SEO-optimized blog post to attract new prospects

Create landing pages outlining key product features and benefits for people at the consideration phase

Share a comprehensive ‘Buyer’s Guide’ ebook to help with conversion

Host webinars with quick tips and best practices to help customers learn about new features and get the most from your product 

Three tips for using content marketing to acquire customers:

📚 Further reading: not sure whether to invest your content marketing budget in humans or AI? We’re running an experiment to find out how they compare .

4. Email marketing

What it is: email marketing is the process of creating targeted, segmented, personalized campaigns that reach prospects right in their inboxes.

How it helps with customer acquisition: much like content marketing, you can use email marketing at various stages of the customer acquisition funnel. It helps you build relationships with new customers, keep prospects engaged, and secure a conversion by informing them of sales, sharing special discount codes and offers, or reminding them of their abandoned shopping carts .

Three tips for using email marketing to acquire customers:

🔥 If you’re using Hotjar: use the Hotjar-HubSpot integration to personalize customer interactions. Create custom lists and trigger automations based on Hotjar session properties (such as ‘duration on site’ and ‘referrer URL’), and use these to send personalized email marketing campaigns from HubSpot for a more conversion-focused experience.

5. Customer testimonials

What it is: customer testimonials are reviews and user-generated content (UGC), such as photos or videos, that you can use throughout your marketing efforts and on your website.

How it helps with customer acquisition: content like this is known as ‘social proof’, and it helps you increase conversions by building trust in your brand. One study found that 95% of customers read online reviews before they shop, and 58% say they would pay more for the products of a brand with good reviews, making testimonials, reviews, and UGC powerful tools in your customer acquisition strategy. 

Three tips for using customer testimonials to acquire customers:

🔥 If you’re using Hotjar: use the Net Promoter Score® or post-purchase survey templates to understand how customers feel about your product and customer experience . Then, reach out to promoters and positive respondents to turn their feedback into social proof that can help you acquire even more satisfied customers.

How to pick the right customer acquisition strategy for your business

Still wondering which of the five customer acquisition strategies outlined above to start with? Here are four factors to consider.

1. Your audience

What channels are your audience on? What are their demographic characteristics? The more information you have on your audience—both their attributes and user behavior —the more you can tailor your customer acquisition efforts to their unique needs. 

This means you focus on attracting the right customers from the very start, setting you up for long-term customer satisfaction .

2. Your budget and resources

What resources do you have? This includes people-power and money. For example, your available budget will affect whether you prioritize paid or organic customer acquisition strategies. 

In addition to the organic methods outlined above, paid customer acquisition strategies include:

Pay-per-click (PPC) advertising

Display ads

Paid social media advertising

Referral programs (which can be either paid or unpaid)

💡 Pro tip: once you calculate your customer acquisition cost , use it to allocate your budget more strategically based on what’s working and which approaches are more cost-effective for your business.

3. Your industry

What customer acquisition strategies are your industry competitors using? We’re not saying you shouldn’t innovate (we would never), but it’s always smart to draw on tried-and-tested strategies.

For example, an ecommerce business may acquire a lot of customers from robust social media marketing, replete with user-generated content and a strong email marketing strategy to remind prospects of sales and special offers. 

On the other hand, a B2B SaaS company may not acquire quite so many customers from participating in the latest TikTok trend; instead, they would focus on creating quality content about best practices for their service to foster product-led growth .

4. Your customers’ journey

What does your average customer journey look like? Create a customer journey map to understand the stages people go through before becoming a new customer. What customer acquisition strategies can you use at each stage?

When it comes down to it, there’s no one strategy that will tick every box: you need to use a combination of customer acquisition methods to meet your goals effectively .

🧑‍🔬  The secret behind every great customer acquisition strategy: testing, testing, and more testing.

Remember how we mentioned user research was key? Well, that’s not just something you do at the start. After all, people—and markets—change. For a truly effective customer acquisition strategy, you need to constantly research, test, iterate, and optimize.

Here are three ways to build continuous testing and growth into your customer acquisition strategy:

1. Create a dashboard to track the most important metrics, such as conversion rate, funnel drop-offs, customer acquisition cost (CAC), and customer lifetime value (LTV)

2. Run A/B tests to understand what works and what doesn’t. If you’re using Hotjar, integrate it with your testing tool (like Optimizely or Unbounce ) to understand the performance of your experiments and enrich your quantitative data with qualitative insights.

3. Use your findings to identify new opportunities, iterate on your successes, and keep improving

Use the Hotjar Dashboard to track all of your key metrics in one place

Drive growth with a user-centric customer acquisition strategy

A successful customer acquisition strategy helps you turn potential customers into loyal brand advocates, improving your customer retention and satisfaction along the way.

Mix and match these digital marketing strategies to create a customer acquisition plan that works for your business—and grows your customer base.

FAQs about customer acquisition strategies

What is a customer acquisition strategy.

A customer acquisition strategy is a plan to bring new customers to your business. Typically, the customer acquisition process takes place across a number of marketing channels and incorporates several different strategies.

What are some examples of customer acquisition strategies?

Some examples of customer acquisition strategies include:

Customer research

Search engine optimization (SEO)

Content marketing

Email marketing

Customer testimonials, reviews, and user-generated content

Influencer marketing

Paid and organic social media marketing, such as LinkedIn or Facebook Ads

Referral programs

What’s the difference between a customer acquisition strategy and a customer retention strategy?

A customer acquisition strategy focuses on building brand awareness and bringing prospective customers to your site, with the ultimate goal of lead generation

The goal of a customer retention strategy is to keep your existing customers by reducing churn and ensuring customer satisfaction

Customer acquisition tools

Previous chapter

Guide index

Average Customer Acquisition Cost: Benchmark by Industry and How to Improve It

Are you trying to find your business’s average customer acquisition cost?

In today’s competitive landscape, acquiring new customers is essential to any successful business’s or product’s growth . The customer acquisition cost (CAC) shows you how effective you are with your sales and marketing efforts to acquire new customers. Benchmarking this crucial metric against your industry helps you assess your standing relative to your competition.

In this article, we’ll delve into the ins and outs of CAC, its industry-specific benchmarks, and the proven practices to improve it.

• Customer acquisition cost (CAC) measures the total sales and marketing expenses for acquiring new customers.
• You can calculate CAC by dividing total expenses by the number of new customers acquired in a specific period.
• A good CAC is significantly lower than customer lifetime value (LTV) – around a 3:1 or 4:1 LTV: CAC ratio .
• The average CAC varies across industries. For example:
• SaaS Industry: $702
• B2B companies: $536
• eCommerce businesses: $70
• You can improve your CAC by:
• Analyzing the performance of the marketing channels and optimizing the ones with the best return on investments.
• Optimizing conversion funnels and increasing conversion rates by identifying and eliminating friction .
• Segmenting customers and delivering targeted marketing campaigns that cater to their needs.
• Adopting a product-led growth strategy to improve customer retention and maximize customer lifetime value.
• Offering personalized onboarding experiences to reduce the need for additional acquisition efforts.
• Implement referral programs to incentivize existing customers to spread positive word-of-mouth marketing and lower your CAC.
• Book a Userpilot demo to see how you can acquire customers more efficiently for your SaaS.

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What is customer acquisition cost (CAC)?

Customer acquisition cost (CAC) is a crucial metric that measures the total marketing and sales expenses a business incurs in acquiring a new customer.

Calculating CAC is crucial because it helps businesses understand the effectiveness of their marketing strategies , budget more efficiently, and determine the value each customer brings, enabling more informed decision-making for growth and profitability.

How to calculate customer acquisition cost?

You can calculate customer acquisition cost by following these steps:

• Choose a specific time period. Depending on your business cycle, it could be a month, quarter, or year.
• Calculate the total cost of acquisition. This consists of the sales and marketing costs, including ad spend, promotions, etc, you incurred in the specific period.
• Determine the total number of new customers acquired during the particular time period.
• Divide the total expenses you calculated by the number of new customers you acquired in the same period.

For example, your SaaS company spent $10,000 on marketing and sales efforts during July. During the same period, it also successfully acquired 100 new customers. The customer acquisition cost is then ($10,000 / 100) or $100.

Customer acquisition cost formula.

What is a good customer acquisition cost?

A good customer acquisition cost (CAC) can vary significantly across different industries. Evaluating CAC alone isn’t helpful because of the disrupted average in different industries.

However, if you want to determine if your CAC is good, you should compare it to the customer’s lifetime value (LTV) . While CAC represents the cost of acquiring a new customer, LTV measures the total value a customer brings to the business throughout their relationship.

The common benchmark for a good CAC is to keep it significantly lower than the LTV. Ideally, the CAC should be around 1/3 or 1/4 of the LTV. You should keep an LTV to CAC ratio of 3:1 or 4:1. It ensures that the revenue you generate from a customer exceeds the cost you incurred in acquiring them and leads to profitable customer relationships.

You can determine LTV: CAC ratio by simply dividing LTV by CAC.

LTV: CAC ratio formula.

Average customer acquisition costs by industry

We’ll now go through the average acquisition costs by industry customer acquisition cost.

Average customer acquisition cost for SaaS

The average customer acquisition cost within the SaaS industry varies greatly across different business sectors.

According to First Page Sage ,

• The average customer acquisition cost companies incur in the SaaS industry is $702.
• The highest customer acquisition cost is in the fintech industry, where businesses incur an average of $1,450 to acquire a new customer.
• In contrast, the eCommerce industry has the lowest customer acquisition cost, with an average of $274 to acquire a new customer.

Here is the full list of the SaaS industry’s average customer acquisition cost.

Average customer acquisition cost for B2B companies

The average customer acquisition cost for B2B companies is a combination of both organic and paid acquisition costs.

As per First Page Sage ,

• Among the B2B companies, the average customer acquisition cost is $536.
• The highest customer acquisition cost is in the higher education and college B2B companies, with an average of $1,143 per new customer acquired.
• The eCommerce B2B has the lowest customer acquisition cost, with an average of $274 to acquire a new customer.

Here are the most B2B companies’ average customer acquisition costs.

Average customer acquisition cost for e-commerce businesses

The average customer acquisition cost for various e-commerce businesses is also different because of the diversity of their industries.

• Among e-commerce businesses, the average customer acquisition cost stands at $70.
• The highest customer acquisition cost is in the jewelry e-commerce businesses, with an average of $1,143 per acquisition.
• On the other hand, the food and beverage industry has the lowest customer acquisition cost, where it incurs an average of $53 to acquire a new customer.

The full list of e-commerce businesses’ average customer acquisition costs is as follows.

How to improve customer acquisition costs?

Let’s go through how you can improve your customer acquisition efforts.

Analyze and optimize the performance of marketing channels

Analyzing and optimizing the performance of marketing channels is critical if you’re looking to improve your customer acquisition costs. By determining which marketing channels yield the best results, you can strategically allocate your resources and maximize the return on investment.

You can leverage analytical tools to track key metrics like conversion rates , click-through rates, cost per click (CPC), and cost per acquisition (CPA) for each marketing channel. These metrics provide valuable insights into the effectiveness of each marketing channel in acquiring new customers.

Then, you should analyze these metrics to identify your high-performing acquisition channels. You should make your marketing strategy by investing more resources in optimizing these successful channels’ performances.

Offer a personalized onboarding experience

You can personalize experiences during the onboarding process to meet potential customers’ preferences and needs. It creates a lasting impression on the users and increases the likelihood of conversion into paying customers.

Customers who get a personalized onboarding experience are more likely to find value and engage with the product or service. As a result, they are more inclined to stick with using your product or service and less likely to churn. This increased user retention directly translates to a higher chance of conversion and lowers CAC, as there is no need for additional costly acquisition efforts.

In the SaaS industry, it’s a common practice to use welcome surveys to collect user persona data and then tailor onboarding flows according to their needs.

Welcome survey created with Userpilot.

Optimize conversion funnels to increase conversion rate

An optimized conversion funnel significantly increases the conversion rate, creates more qualified leads, and reduces the CAC. For it, you should first outline the key steps from the initial interaction to the final conversion in your conversion funnel.

Then, you need to meticulously analyze the conversion funnels to pinpoint the areas requiring improvement. It enables you to identify any user friction or conversion leakage hindering the smooth progression of potential customers through the funnel.

You should then take proactive action to eliminate these friction points and eventually improve the conversion rate.

Analyze conversion funnels with Userpilot.

Analyze and Optimize Conversion Funnel With Userpilot

Go product-led growth to maximize customer lifetime value.

A product-led growth strategy emphasizes a self-service model that allows users to explore, try, and experience the product before purchasing it.

Letting potential customers become familiar with the product’s value firsthand reduces the need for costly sales and marketing efforts.

The key to success with a product-led growth strategy lies in engaging users effectively within the product itself. You need to implement the right in-app engagement tactics to guide users toward the paid plans. It lowers your acquisition cost and ensures more user retention with increased customer lifetime value.

For example, you can set limits for feature usage and trigger upgrade messages when users reach limits. It helps the users realize the product’s full potential and pushes them to upgrade. Loom triggers upgrade messages when users reach certain feature usage limits and prompt users to take action.

Segment customers for targeted marketing efforts

Customer segmentation is a powerful strategy to curate targeted marketing efforts to satisfy more customers. You can use it to deliver personalized experiences and offerings to potential customers and easily convert them.

For customer segmentation, you should utilize data-driven insights about your potential customers. After identifying the ideal customer profiles, you should target and segment those potential customers more likely to convert.

In the case of SaaS companies, segmenting customers based on in-app activities is highly effective. It enables the companies to understand customers better and create marketing campaigns that cater to the segment’s needs .

Companies can then trigger in-app marketing messages to encourage potential customers to take specific actions that lead to conversion. As a result, the overall cost to acquire new customers decreases since the companies have more customers acquired.

User segmentation in Userpilot.

Implement referral programs to acquire new customers

Offering incentives or rewards to customers who refer new users helps you tap into your existing customer base as a valuable source of new leads. Referrals from satisfied customers also carry higher trust and credibility to ensure a better conversion rate.

Referral programs let satisfied customers advocate for the product or service through word-of-mouth marketing . Customers with positive experiences and incentives to refer others become your natural brand ambassadors.

This organic advocacy not only lowers CAC by reducing the need for costly marketing efforts but also fosters a strong sense of loyalty among customers. As a result, you acquire new customers at a reduced cost while creating a better possibility of customer retention from the beginning.

Dropbox referral program example.

Understanding and optimizing the average customer acquisition cost (CAC) is pivotal for your product’s smooth growth. Benchmarking your CAC against industry standards offers valuable insights into your position and helps you identify areas for improvement.

Want to get started with improving your average customer acquisition cost? Get a Userpilot Demo and see how you can acquire customers more efficiently.

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Customer lifetime value: The customer compass

Traditional brand owners and retailers are increasingly encroaching into the e-commerce channel—and for good reason. After all, digital engagement with customers provides companies with valuable data on consumer behavior that allows them to optimize marketing and product development. In addition, by operating their own sales channel, providers retain control over user experience and brand image. Enter COVID-19, and suddenly the Internet is rapidly becoming the shopping channel of choice for more and more consumers, a trend that is likely to persist beyond the pandemic.

About the authors

This article was a collaborative effort by Max Ackermann , Karel Dörner , Fabian Frick, Marcus Keutel , and Philipp Kluge.

That said, the new e-commerce players also face a challenge: winning and retaining customers is an expensive affair. That is why it is crucial for success to invest primarily in those customers who are lucrative for the company in the long run. It is important to understand these customers intimately, to engage them with the right channels, and to tailor offers to their context and needs. This can only be achieved by drawing on customer-related metrics—of which customer lifetime value (CLV) is first among equals—and by interlinking them intelligently as the foundation for effective and efficient marketing.

“CLV is our core steering metric” Four questions for Emmanuel Thomassin, Chief Financial Officer of Delivery Hero

Just how important is clv for delivery hero.

Customer lifetime value is one of our core metrics. It’s a topic we’re driving intensively at all levels of the organization and we have set clear goals from which we can only deviate in exceptional cases. We use CLV to support our strategic and operational decisions, such as whether to enter a new market or whether to continue or end a marketing campaign.

So how do you go about that?

We have a standardized approach for all our markets. CLV monitoring is directly linked to our operational marketing systems and thus directly influences our investments. It is crucial to continuously adapt and improve the calculation of CLV and the corresponding operationalization in marketing. Initially, for example, we only calculated the cost of customer acquisition; meanwhile, we also know what it costs us to retain customers. Over time, we have learned an enormous amount, especially through monitoring in new markets and with the introduction of new business models.

Do you see a trend among your customers?

Perhaps the most important KPI-based analysis is breaking down customers into cohorts to fine-tune the targeting of marketing drives. Over the years, we have seen CLVs rising steadily across all our cohorts, even before Covid. Today, they are many times higher than the investments in customer acquisition and retention. This shows that our marketing measures, among them personalization, have a direct impact on the KPIs and thus on Delivery Hero’s success.

Do you still see untapped potential in the way you use CLV?

A major challenge is responding directly to improvements in the KPIs with measures designed for pinpoint accuracy, especially in marketing, and then evaluating these with precision. That’s something we are working on, aside from further refining our analytics and increasing their granularity to the level of geographical micro-cells.

Digitally aligned companies and start-ups have long been successfully applying and refining this approach (see sidebar, “‘CLV is our core steering metric,’ Four questions for Emmanuel Thomassin, Chief Financial Officer of Delivery Hero”). Many traditional manufacturers and retailers, on the other hand, still have some catching up to do. To make the most of the CLV approach and use it to manage their e-commerce business, they should adopt a long-term strategy and proceed systematically in three steps: collect data, determine true customer value, and target investments to the most valuable customers.

Collect data throughout the customer journey

To estimate the current and future value of customers and keeping privacy regulations in mind, companies need to collect relevant data points on as many customers and their behavior as possible over multiple years. This is because the corresponding analytical models are dependent on the availability of sufficient amounts of information to identify relevant patterns. The greater the volume of data available, the more meaningful and accurate the analyses. Three categories of data are required:

• Transaction data such as shopping timeline, product information, prices, method of payment, delivery, or returns are supplied by the e-commerce platform and the connected financial systems.
• Demographic data such as gender, age, occupation, and place of residence are condensed into customer profiles in order to better predict future shopping behavior and personalize marketing actions.
• Marketing data such as search behavior, response to campaigns, and external online data help to flesh out the respective customer profile and, in turn, deepen customer knowledge, including as regards preferences or purchasing behavior.

Despite ample data, it is often difficult to clearly identify customers throughout the entire customer journey. This is partly due to purchases made across different channels, for instance, in the company’s own online and offline stores or perhaps through third-party suppliers such as retail partners, which often do not require registration (with an e-mail address, etc.) for identification.

Successful providers solve this problem with an integrated customer database (customer data platform) that can recognize customers even when they do not sign in. For this purpose, profiles comprising as many attributes as possible are created for visitors to the various channels (based on browser data, among other things). Then, returning visitors (including to different channels) are identified by matching them against the full array of profiles compiled. Aside from linking different data sources and formats, the customer data platform also enables the integration of suitable external systems as well as customer segmentation according to behavior and demographic data. Key steps in this context include anchoring the system’s continuous improvement, but also data use by the organization’s departments from the outset.

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Determining the true value of customers.

What happens to the data collected? Here, in the second step, is where customer lifetime value (CLV) comes into play. This is because it can be used to measure a customer’s value, in the long term, over their entire time as a customer of the company. This value is compared with the customer acquisition/ retention costs (CAC), i.e. the marketing investments made or planned that are necessary to acquire and retain the customer. Finally, both indicators are linked to derive recommendations for action with regard to strategic and operational decisions (Exhibit 1).

A distinction is made between three levels of complexity when modeling CLV and CAC:

The descriptive model calculates CLV using historical consumer data and identifies behavioral patterns of customer groups mostly through simple manual analysis. This comparatively simple method yields rapid results, but they are merely hypotheses and therefore of limited value; they can only serve as an initial indicator of CLV for potential decisions.

The predictive model uses historical data patterns to determine future CLV. Consequently, the results are more accurate and meaningful as the customer’s individual profile is factored into the equation along with their remaining time as a customer. Backed by this knowledge, CLV managers can make more effective decisions. However, this model requires more comprehensive advanced analytics capabilities, such as customer identification across multiple channels. For a 360-degree view, it is worth having complete historical customer data as well as regular updates of sales and cost data.

The operative model goes one step further: it automatically predicts CLVs using machine learning and makes initial recommendations for decisions, amplifying the CLV effect. In addition, predictive accuracy and decision making improve with each update. For the operational teams, this means that rather than elaborating decision recommendations, their primary job is to review and continuously monitor them. Yet, creating such models is a much more complex endeavor that can take months, if not years.

For all three models, continuous updating data and calculations is indispensable. For example, CLV must be adjusted after each customer purchase, but the CAC value must also be increased if, for instance, a marketing campaign is launched for a specific customer group. This is essential so that the data and the associated analytics results can be used for future campaigns.

Targeted investment in high-value customers

The last and most important step is to evaluate the CLV and CAC computations in such a way that the company can derive strategic and operational recommendations for action and decisions from them. It is essential to consistently measure the impact of the respective decisions, for example, the increase in CLV as a result of certain marketing measures.

With regard to the depth of evaluation, a distinction can be made between three levels. At the first level, only the average of all customers is considered, although this can already be very helpful when making decisions about expansion into new markets, channels or brands, for example. As a rule of thumb, expansion is advisable as soon as the estimated CLV exceeds the CAC by a multiple—even if profitability has not yet been reached. In practice, mature digital business models should display CLV-to-CAC ratios ranging between at least 2:1 and up to 8:1 or more. At this level, CLV can also be used as a metric to measure and improve the performance of organizational units such as country branches, or to gain a more customer-focused perspective on the business (rather than a purely sales- and profit-centric view).

The next analytical level focuses on cohorts of customers clustered on the basis of their CLV and CAC values in order to improve operational decisions in particular. Demographic data, such as gender, age, place of residence, but also behavioral data such as purchase frequency, brand loyalty, and returns are typically taken into account.

These data sets help marketing and sales teams identify indicators of high CLV and low CAC respectively, and tailor marketing campaigns to individual cohorts. Exhibit 2 illustrates an example of such a cohort analysis: in addition to the distribution of customers among the various CLV levels, it shows the characteristics of less lucrative and particularly valuable customers, as well as the recommended actions that can be derived from them.

Finally, at the third level with maximum analytical depth, the model targets individual customers. However, this only makes sense if the company is operating advanced, automated marketing platforms. Otherwise, individual marketing efforts would be prohibitively expensive and the cost of acquiring and retaining customers would skyrocket.

In a nutshell, CLV offers both established and new players in the e-commerce space the opportunity to better understand, target, and serve their customers in order to engage them in an effective and efficient manner, and create value for them. However, the operationalization of CLV and CAC can also set in motion entirely new developments. For example, successful e-commerce companies are moving to build a network of physical stores to operate in tandem with their online business. Take, for instance, Mr. Spex, Europe’s largest online eyewear retailer, which is opening more and more stores in German cities to attract new customers and create an omnichannel experience. A response to the rising cost of customer acquisition and retention in the online channel in recent years, this trend capitalizes on the fact that it is often cheaper and more efficient to strike the desired CLV-to-CAC ratio in conjunction with offline channels.

Max Ackermann is an associate partner in McKinsey’s Berlin office; Karel Dörner is a senior partner in the Munich office, where Dr. Philipp Kluge is an associate partner; Marcus Keutel is a partner in the Cologne Office; and Fabian Frick is a project manager in the Frankfurt office.

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Rethinking customer retention vs. acquisition

Which approach generates the best roi.

When spending money to attract customers, business leaders must first prioritize who they are targeting – new customers or familiar faces. The conventional wisdom in most consumer businesses, especially the restaurant, hospitality and retail sectors, is that 80% of a business’s sales comes from the top 20% of its customers – the “80/20 rule.” Following this logic, leaders in these sectors commonly make large investments in customer retention marketing strategies, often in the form of loyalty initiatives. These strategies can be expensive – paying for the incentives and the related technology and marketing – but the overwhelming importance of customer retention makes it worth the investment. No business wants to put 80% of its sales in jeopardy. But what if the 80/20 rule isn’t true? What if the most frequent customers are overvalued? Grant Thornton’s research into consumer markets reveals a different answer. There is no 80/20 rule – rather, most often, it’s closer to a “50/20” rule. “On average, 50% of a company’s sales come from the top 20% of its customers, not 80%,” according to Kevin O’Connell, a Grant Thornton managing director in Strategy and Transactions. “Why does this matter? Businesses are likely focusing too much effort on customer retention and frequency and missing their best opportunities for growth. The reality is that more than half the sales for almost all brands come from infrequent customers, and this is where most of the growth opportunities lie.” Businesses can’t grow effectively by simply focusing on their best customers. There simply aren’t enough of them. To achieve true growth, companies need to continually increase market penetration. Why do companies miss this insight? Many brands don’t have visibility to their whole customer base. When they do have broad customer data, the first instinct is to look for the most valuable customers and figure out how to create more of them. Unfortunately, the high-value customers tend to be a small group. They also tend to be “high frequency category users” – i.e., they’re the best customers for many brands. “If a business believes in the 80/20 rule and sees that the vast majority of their customers aren’t that frequent, the tendency is to double down on loyalty initiatives because they think they’re failing,” O’Connell said. “In reality, this is simply normal market behavior, and intensifying a focus on loyalty initiatives diverts resources away from the true source of growth – attracting more customers.” Our studies have shown that almost all consumer behavior could be described as “randomly frequent.” According to O’Connell, “‘Loyalty’ is not a driver of consumer behavior. People buy when they have a need or want, and those needs and wants differ depending on the variables in their daily lives.” Research by the Ehrenberg-Bass Institute for Marketing Science, a world leader in marketing research, has found that customer frequency patterns tend to “regress to the mean” over time – basically, today’s frequent customers may be less frequent tomorrow and vice versa. Why is that? Life happens. People experience big life events (move, get married, get a new job, have a child, start a new hobby, join a new group) and little life events (go to a meeting, work late, start a project, go to the gym, have friends over, watch a sporting event, read a book), and all these experiences affect demand – the products and services people need and when they need them. Brands don’t create demand. They capture share of customers in the market, and they do it through brand awareness and accessibility and differentiated products and experiences. The best loyalty strategy is to deliver a better, more consistent experience for the customers who have a need for the product. Analytics of customer behavior proves this. A coffee outlet that adds a drive-through window improves customer accessibility and experience, and its sales will increase. The key to winning customer decisions is to understand the key buyer values in your market and differentiate your business in a meaningful way from the competitive alternatives.

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Market penetration is the only sustainable winning growth story, and investments in customer acquisition efforts will deliver a better return over time. Customer retention vs. acquisition? The math is pretty clear.

Kevin O’Connell

Managing Director, Growth Advisory Services Grant Thornton Advisors LLC

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