The journey to the land of top-notch customer acquisition processes is riddled with twists and turns. And while customer acquisition is challenging, converting new business is vital to keeping a company profitable. Without customers, a company will not survive.
The right customer acquisition strategy should set your customers up for long-term success with your product and or services. However, companies often make decisions against their better judgments and wind up on the wrong path. If executed correctly, customer acquisition will enable you to reach your revenue goals in the near- and long-term. Here are five common mistakes that emerge at customer acquisition and tips to avoid them to get on the path to success.
Your Customers Needs Don’t Come First
Do your customers see success with your product or services? Are they happy with the level of service they receive? If you answered ‘no’ to one or both of these questions, now is the time to go back to the drawing board. The needs of your prospects and customers should be the number one priority in your customer acquisition playbooks.
You’ve likely heard the phrase, you only get one shot at a good first impression. We’ve all received bad service in a business setting at least once in our lifetime. How did that experience make you feel? Did you solicit that business again? Or worse, did you post a disparaging review on Yelp or share your experience with family, friends, and colleagues? An accumulation of bad customer experiences can ruin your company’s reputation. Bad impressions range from not having inventory to keep up with demand or a negative customer service experience. You can prioritize the needs of your customers by:
Not Knowing the Cost to Aquire a New Customer
Customer acquisition is often the most costly expense of the buying lifecycle. And over the last five years, customer acquisition costs have increased by greater than 50%. Unfortunately, not every company has the budget to spend exponential amounts of money to acquire new customers. However, knowing the amount you spend to acquire new customers will enable you to optimize and lower costs. It will also allow you to measure the ROI of marketing and sales campaigns.
Customer acquisition cost, or CAC, is the cost a business accrues while converting prospects to buying customers. Advertising, marketing, and sales costs are all included in the CAC. CAC is often calculated by month, quarter, year or by a specific campaign.
Calculate CAC by adding the marketing and sales costs connected to a specific campaign and dividing that by the number of customers acquired from that campaign. For instance, if a company spends $500K on sales and marketing, and acquires 500 new customers, their customer acquisition cost would be $1K.
This high-level CAC formula is MC + SC / AC = CAC, where:
Failing to Use Data
If you aren’t accurately using data, you’re not alone. Forrester Consulting recently conducted a survey that reported 64% of marketers believe that they need better prospecting data. Accurate data can help you build audience trust, boost engagement, and ultimately generate business. Analytics and reporting tools will allow you to identify trends and leverage data to make more insightful driven decisions throughout the customer lifecycle. These tools arm teams with the ability to visualize data from the sales pipeline, prioritize leads, identify market trends, and conduct forecasting reports.
Gathering and analyzing prospect and customer data will enable you to:
Lack of streamlined processes
Signing new business is vital to the success of any business. As such, many new businesses make the mistake of prospecting prior to having a streamlined process in place. Without strategy and direction, customer acquisition will result in misguided efforts, lost time and money, and unstable profits.
You’ll want to start by creating an ideal target audience and buyer personas to accurately reach and sell to potential buyers. After that, you can begin to map out full-funnel strategies: awareness, consideration, and decision making. In addition, marketing automation tools will help centralize efforts and streamline processes. Here are a few tools you should implement if you haven’t already:
Not Creating Return Customers
We all know it’s more cost-effective to keep a current customer than it is to attain a new one. In fact, a 5% increase in customer retention rates has the potential to increase profits by 25-95%. Many companies set a goal to gain repeat customers but fail to implement a proper strategy. Don’t fall into this trap.
To transform new customers into loyal brand advocates you need to think beyond the first sale or interaction. What are strategies to encourage a return visit or purchase? A personalized ‘thank you’ note or welcome email can work for some businesses. Offering discounts to entice a repeat purchase is another common tactic. You’ll need to give customers a reason to come pack or purchase again. Here are a few tips to engage customers and to lower churn rates:
Do you have any customer acquisition tips or tricks? Tell us in the comments below!