Most businesses have one challenge in common and that is the endless ‘hustle’ – finding and acquiring new customers to drive profits.
The methods for attracting new clients might look different for each industry, but everyone wants customer acquisition strategies that work.
Studies show acquiring new customers is the greatest business development focus for 44% of companies, compared to just 18% of businesses that prioritise customer retention.
Considering acquiring just one new customer can cost five to 25 times more than retaining an existing one, it’s important to get it right.
And to ensure that initial investment pays off, businesses need to have systems in place to keep customers coming back.
But how do you get them through the door in the first place?
Startups and new sole-traders might register their business name, print flashy new business cards and launch a brilliant website, only to find themselves sitting around waiting for the phone to ring.
While owners of established businesses often become so overwhelmed with their current workload, they don’t have enough hours in the day to think about growth strategies.
So while some people have time to personally action their acquisition methods, but no budget, others rely on more automated, and often more expensive ways to attract new clients.
Regardless of your situation, running the numbers is a good place to start. To determine how much money you can safely invest on the customer acquisition process, you need to track three key figures:
Customer Acquisition Cost: The combined sales costs (the cost of making the sales including staff) plus marketing costs in any one period, divided by the number of new clients acquired in that time. This is the average cost to you of acquiring each customer. (If you haven’t started actively spending on customer acquisition yet, move to the next step to determine your budget.)
Customer Lifetime Value: This is the average value of each sale, multiplied by the actual or anticipated number of repeat sales, then multiply that number by the average time you retain each customer for. Most experts recommend the CLV should outweigh your CAC at least 3-1. If it doesn’t, your customers are probably costing you more than they’re worth and your current acquisition strategy won’t be sustainable.
Churn Rate: This is the percentage of customers you’re losing. Simply divide the number of customers, or revenue you lost in the selected period, by the number of customers, or revenue, you started with. Can you afford to replace that lost revenue at your current Customer Acquisition Cost?
With the above figures in mind, here are some strategies for acquiring new customers you might like to consider.
Collaborations: Collaborations can save you time, reduce acquisition costs, and extend your reach to a relevant and primed audience. When deciding who to partner with, identify businesses with engaged buyers that align with your target market, without competing. You could partner with an online retailer that shares similar target demographics, and include a credit voucher in their customer parcels. If you sell products, introduce your brand by offering a free sample in a subscription box service. Or if you have a physical location, consider a collaborative initiative like Tasmania’s Tamar Valley Vineyards Dozen. Visitors can purchase wine from the participating vineyards and have their bottles packaged and shipped to their home from the final stop. As a result, major wineries are actively promoting smaller boutique vineyards and increasing sales among interstate and overseas travellers.
Reviews and Testimonials: Word of mouth was once the only marketing strategy for many businesses – and it has stood the test of time. According to Nielsen polling, 84% of consumers trust recommendations from family, colleagues, and friends. While Sensis found 44% of Australian social media users read business reviews, and 60% of those will read up to five reviews before making a purchase decision. Customer testimonials also have the highest effectiveness rating of all content marketing. So instead of trying to convince potential customers why they should choose you, invite happy customers to spread the good word for you.
Referral Incentives: Adding an incentive is a way to ramp up your word of mouth marketing. Studies show 95% of millennials want an incentive for promoting products online, while more than 50% of respondents said they were more likely to provide referrals if they received access to an exclusive loyalty program or incentive. And it doesn’t have to be money. Cloud storage service Dropbox increased signups by 60% simply by offering users 500mb of free storage space for every new friend they signed up.
Ebooks and Free Downloads: Content marketing works by showcasing your skills, rather than just talking about them. Developing a free eBook or other downloadable content marketing resources provides the reader with genuine value, while allowing you to grow your mailing list by capturing email addresses. This is where the marketing funnel fun begins!
Live Workshops, Presentations & Webinars: Anyone in any industry can deliver a workshop or presentation in person or online that delivers a helpful snippet of expert advice, and then offers an upsell (usually with a sense of urgency). A tyre retailer might offer free classes on how to change a tyre, and provide all attendants with an exclusive offer for new tyres or a wheel alignment. A cookbook author could offer a free cooking demonstration, and sell their book at an event-only price. And an online service might run a free webinar with insights into a common problem their target audience is likely to experience, followed up with a limited time offer for their service. Not everyone will buy, but a lot do – which is why webinars have been ranked as one of the top three content marketing tactics.
Tradeshows and Expos: Another way of meeting potential leads in person is through tradeshows and expos. It’s a chance to showcase your offerings in a relaxed environment. And while selling may not be a major focus of the day, you can capture email addresses for later contact by offering a competition or e-news sign-up via tablets or touch screens.
Online Ordering Services: From Tripadvisor to Uber Eats, consumers are turning to global websites to book everything from Christmas holidays to their nightly dinners. Brands need to consider the costs and risks associated with being listed on third party sites, but the statistics suggest they offer solid growth potential. According to a Morgan Stanley report, online takeaway food orders are tipped to more than double from $1.5 billion in 2017, to $4.2 billion, or nearly one quarter of the market, by 2025.
Functions & Focus Groups: Learning more about your existing customers and what they want from your business can help you learn how to better target and deliver to new customers. Focus groups can be a simple meeting, or more delicately disguised as a VIP customer function with feedback forms or casual conversation.
Competitions: Competitions are commonly used to drive social media traffic, but they’re not always the most effective method for attracting paying customers. By using an official competition app or directing leads to an entry form on your website, you can capture contact details to grow your mailing list – and hopefully your customers. Collaborating with other businesses to run an even larger scale competition can significantly increase audience reach for your brand. Dozens of wedding vendors give away just one prize each in the annual Australian Bridal Industry Academy Bag competition for engaged couples, gaining widespread exposure through ABIA’s online channels, including 55,000 followers across Facebook and Instagram.
Telemarketing: Now that one third of Australians have ditched their landlines, telemarketing is tougher than ever. And let’s face it, no-one appreciates unsolicited sales calls. Recent statistics suggest as little as 1% of cold calls result in meetings and 90% of B2B’s don’t respond to cold sales pitches. But warm calling can achieve up to a 40% success rate. So if you are considering telemarketing, it’s best to use it as a second touch point following a prior referral or expression of interest.
Letterbox Drops & Brochures: Walking the streets of your local neighbourhood handing out flyers is old-school marketing at its best. It’s not for everyone, but small businesses targeting a local customer base, like real estate agents or gardening services, can benefit from this personal touch. And if you DIY, it’s a great way to get some exercise!
Free Trials: While it’s important not to devalue your business by giving too much away, free samples or trials can be an effective strategy to entice new customers. One study found consumers are six times more likely to try a product introduced in sample form. And SaaS trial sign-ups that don’t require a credit card result in double the number of paying customers.
Social Media: You can help new customers discover your business by using social media to leverage most of the strategies we’ve discussed here, and by taking advantage of built-in social media features. Creating a Facebook Group in addition to your business page allows you to build an online community and a direct link to an engaged audience that’s more likely to buy. Targeting paid advertising toward ‘lookalike audiences’ on social media allows you to introduce your brand to new potential customers with similar interests to your current followers. And posting promotions or content that encourages your followers to tag their friends can work as an informal referral system because friends often have shared interests.