What is Customer Acquisition?
Customer acquisition (CA) is a way to get potential customers or prospects to purchase a brands products or services. There are many potential CA strategies for a brand, the most successful of which can depend on resource, audience and industry. Find out everything you need to know about customer acquisition below.
Finding new customers
Customer acquisition is the process of converting a prospect's consideration, awareness or interest in a brand into a purchase. It’s a form of marketing that focuses on consumers who may already have been exposed to a brand, to result in a conversion.
Why is customer acquisition important?
Customer acquisition is important for any business. It brings in revenue to increase profit and keep business’ growing.
However, customer acquisition can be a higher priority for some businesses than others. A more established business may have a stable customer base, with a loyal set of customers who are aware of the brand and continue to purchase their products or services on a regular basis.
Customer acquisition can be a lower priority for these kinds of businesses, as sales will happen more naturally. These brands may focus more on strategies to improve brand awareness or customer retention, rather than a pure focus on finding new customers through acquisition.
Businesses with a less established customer base may prioritise customer acquisition as a strategy to earn revenue and establish customer loyalty.
Although customer acquisition has many advantages, it doesn’t come without its own set of challenges. Find out more about some common customer acquisition challenges and how to overcome them.
What is customer acquisition cost (CAC)?
Customer acquisition cost (CAC) is a way to measure customer acquisition. Rather than simply measuring the number of customers a business gains, it’s important to consider costs associated with acquiring them.
Tracking the CAC helps brands to evaluate the effectiveness of different channels in relation to customer acquisition. These insights can also be used to enhance future acquisition campaigns.
How can I measure the cost of customer acquisition?
To measure CAC, divide the amount spent on an acquisition channel, by the number of new customers. The result is how much it costs a brand to acquire a new customer using this marketing channel. Although often it is more complex than this because channels may nudge prospects closer to a state of buying but still miss that last touch channel attribution.
Example:
In its simplicity, £5,000 spent on a direct mail campaign to acquire 500 new customers, going by last touch channel attribution would have a CAC of £10.
How can I improve my customer acquisition cost?
There are many ways marketers can improve the CAC of a customer acquisition campaign. It comes down to using data, research, and insights to adjust and optimise your acquisition strategy. Improving the CAC also requires an understanding of the role that different marketing channels play in the customer journey and how marketing channels can complement each other. Often an integrated approach is best, meaning brands should look to use both online and offline marketing channels.
There are valuable insights that can be found from analysing the performance of previous acquisition campaigns. Brands can also analyse the CAC of specific channels and how they perform with certain individuals or demographics. These insights can be used to tailor future campaigns to make them more efficient and lower the total customer acquisition cost.
Customer acquisition channels
There are various marketing channels brands can use as part of a customer acquisition strategy, including digital and traditional methods.
Direct mail
Direct mail is personalised, addressed mail, sent to existing or potential customers. One of the benefits of direct mail is that it is targeted, whether it’s sent to a certain demographic, location, or a consumer who has previously interacted with a brand. As direct mail is a targeted form of direct marketing it can make communications sent to the recipient more relevant and engaging and more likely to result in a conversion.
Brands can send marketing mail to recipients who have shown an interest in their brand, whether they’ve previously purchased an item or signed up to a subscription, emails or newsletter.
Find out how mail can drive customer aquisition.
Other traditional acquisition channels
As well as direct mail, other traditional acquisition channels include linear TV, radio and print media, including leaflets (door-drops) and Partially Addressed Mail (PAM). These acquisition methods can reach large audiences and are great for small and large businesses looking to acquire more customers.
Although these channels reach a large audience, rather than following a broadcast approach these campaigns can be targeted to specific audiences, based on geometric data, demographics, or a consumer’s history with a brand. This considered approach can increase the chances of a purchase and improve the CAC of the acquisition campaign.
Digital acquisition channels
There are many digital options available for customer acquisition. Some of these include SEO, paid search, connected TV, paid social media and email marketing.
These acquisition channels should complement each other to form an integrated approach in a successful acquisition strategy. This way, consumers of various demographics and at different stages of the buying journey can be targeted, which can increase the number of purchases.
What is the customer acquisition funnel?
The customer acquisition funnel is similar to the marketing funnel, however focuses solely on purchase rather than customer retention and loyalty. It demonstrates the journey of a customer from becoming aware of a brand to becoming a paying customer. The acquisition funnel can vary between brands and industries, however, follows this structure:
• Awareness
• Interest
• Consideration
• Intent
• Purchase
Thinking about how you can find more customers? Here are 3 proven ways.
This guide showcases three proven ways that you can use mail to boost your customer acquisition strategy to find more customers, even in today’s competitive ennironment. Partially Addressed Mail, direct mail and door drops can play a unique role in finding your business more customers. For example, did you know it’s possible to target prospects in specific postcode areas, without requiring their personal data?
How to plan a customer acquisition strategy
When planning customer acquisition strategies using insights and data from previous campaigns can be essential. There are other data-related insights that can help as well.
Geodemographic segmentations
Geodemographic segmentations are commonly used to find new customers. These are models created using demographic information looking at attributes in a certain area, like:
• Age
• Gender
• Education
• Income
Segmenting prospect groups by location is a useful way to analyse consumer profiles. Brands can get an understanding of their customers and find a lookalike audience, such as like for like locations or households.
Customer profiling and modelling
Brands can use data and insights to evaluate customer lifetime value. This is an estimate These models can indicate whether prospects are likely to convert to purchase and provide insight into how valuable a customer they might become over time. Consumer profiling can also tell brands which customers would be less valuable, allowing brands to allocate marketing spend more effectively.
The outputs of acquisition modelling provide marketers with a deeper level of insight from which to construct targeted acquisition campaigns - featuring mail formats such as leaflets (door drops), Partially Addressed Mail (PAM) or personalised Direct Mail - for more targeted communication.
Regional analysis
We might live in an increasingly virtual world, but millions of consumers still visit physical shops and stores.
Local and regional data analysis can provide insight to allow you to create catchments based on travel time. Regional analysis can also help you understand your brand awareness across the country and aid the planning of any local and/or national marketing activity.
Customer acquisition case studies
Here are some examples of leading brands who have successfully grown their customer base.
HelloFresh has recipe for winning new customers using targeted direct mail
HelloFresh significantly expanded its customer base by effectively targeting Homemovers with direct mail. Partnering with PSE, they used Royal Mail Homemover data in their September direct mail campaign.
Key to this success were unique QR codes and interactive voucher cards, driving customers online to explore HelloFresh’s offerings. This innovative strategy led to a 64.5% uplift in response rates and a 26% improvement in CPA. This success has made Homemover targeting a year-round strategy for attracting new customers.
Princess Cruises makes a splash with door drops
Princess Cruises used door drop advertising to make a splash in the competitive cruise industry. By sending beautifully designed catalogues to high-potential households, they showcased their exceptional onboard experiences and unique destinations. These catalogues, with compelling visuals and QR codes, captured attention and drove readers online to explore more.
Their strategy included limited-time offers and helpful information about cruising and destinations, ensuring potential customers were inspired and informed. The January launch was perfectly timed for peak booking season. The results? A whopping £1.5 million in sales and an ROI of £20.10 for every £1 spent.
See how Princess Cruises used door drops to capture attention of their highest-potential households
