At some point in the lifespan of any company you need to be asking yourself…
It’s no shock that attracting new customers is a primary business goal for most companies around the globe, but with an oversaturated market and increasing digital involvement, it is also no surprise that this is a difficult task. It can be five times more expensive to gain a new customer than it is to retain an existing one. Overcoming that challenge offers a significant reward, though. Research shows that increasing retention rates by just 5% can increase profits anywhere from 25% to a whopping 95%.
So how do you increase your client acquisition without spending thousands per customer? Data. It plays a role in almost every approach to acquisition marketing and can help you obtain new customers.
A customer acquisition strategy is a company’s approach to bringing in new customers. It involves marketing efforts, advertising, referral programs and sales, among other methods used to draw someone in. You may need to persuade them to use your service or convince them of the benefits of a product. Perhaps you need to add value with a loyalty program. All of these are ways a company may try to acquire new customers.
Customer acquisition is an essential part of judging the value each customer brings to a business. A significant component of a client acquisition strategy is the customer acquisition cost (CAC). The CAC is a calculation of the amount of money required to bring in a new client or customer, and it can vary widely among industries. Minimizing CAC can help save money and ensure that you still get a profitable return on investment from the customers you acquire. We’ll talk about it in more detail later, but this number is a significant component of your strategy.
For smaller businesses or those just starting, a customer acquisition strategy may be more crucial than it is for larger, established businesses. It can help them grow and develop a personalized relationship with many of their clients. Businesses of all sizes still need to focus on acquisition, as it is a major player in the continued sales and success of a company.
Much of customer acquisition is about identifying patterns and trends in behavior, particularly those that indicate a substantial likelihood of a person converting to your business. Data helps us understand those patterns and trends. Understanding your existing customers can help you understand potential customers, and appealing to your potential customers with the data they provide, such as previous purchases and search queries, can better your chances of conversion or acquisition. You can personalize your advertisements and market directly to the customer, providing a competitive edge.
A critical aspect of using data to drive acquisition is that of cohesion. Departments must work together and have the same goal in mind. Otherwise, they may gather data improperly or misuse it. Duplicate records and inaccurate information can make analytics useless, while departments that don’t communicate with each other may not share the data, leading to inefficiency and hiding valuable connections. Keeping data streamlined and accurate is vital to a successful customer acquisition strategy.
Some of the methods businesses use in new customer acquisition marketing include:
Nearly all these methods depend on data or can use it to improve their marketing efforts.
With new technologies and the ease of gathering data, customer acquisition has taken on a new dimension. It can be expensive to obtain a new client, and data offers unparalleled efficiency. You can easily collect information and send marketing materials directly to the customers they would affect most. Here are a few methods for improving your customer acquisition strategy that reap the benefits of data.
CAC is a vital measurement that helps you calculate the success of your customer acquisition strategy. Finding the right CAC can save time and money and allow staff to improve the quality of the leads they generate. Some of the costs a CAC might include are:
To calculate the CAC, you’ll need to select a date range. Say you’ve chosen to review Q1. You would add together all the costs associated with acquiring the customer and divide the total by the number of new customers you got during Q1. The result is your CAC for that period.
Another number that you’ll want to find is the lifetime value (LTV) of your conversions. Each customer provides an LTV of how much profit they will generate for the company, and this LTV should be higher than the cost it takes to acquire the customer in the first place. To get the LTV, find the average amount spent on a purchase and the frequency of purchases throughout that time. Multiply these values together to find the customer value. Finally, multiply that result by the average number of years a customer purchases items from your business to find your LTV. This number provides you with an expectation of how much profit new customers are likely to generate.
Once you’ve found your CAC and LTV, compare the two. Most marketers suggest a three-to-one LTV:CAC ratio. Reaching this ratio can help ensure the profitability of your acquisition efforts. It confirms that marketing efforts aren’t returning low-benefit customers or none at all. These numbers offer you a comprehensive view of the viability of customer acquisition efforts.
In the digital age, customers need to be able to contact a company when and how they want, and it may correlate to reaching business goals. Leaders in customer experience are nearly three times as likely as their colleagues to significantly exceed their top business goals, and contact is a part of that. Between social media channels, email, website contact forms and phone numbers, people have different preferences across demographics and industries. Reaching customers through their preferred medium and in the right way can be a significant part of interacting with them and creating a positive experience.
Consider how customers can reach out to you if they have a problem. Are you easy to get in touch with, and can they reach you in a variety of ways? What do they do if they need to make a payment? You can make it easier on your customers by providing multiple payment options, such as paying:
Unsure of how to find out what your customers want? Send a survey. Ask them questions like how they prefer you contact them and how they would like to contact you or make payments. Finding their preferred channels can help you improve targeted communications and satisfaction.
You’ll need to understand your audience and their needs to select the appropriate channels. For example, advertising on Snapchat and Instagram won’t do you much good if your audience is mostly older people who don’t use smartphones in the first place. Surveying them and using the data you gather can help you inform your channels of communication.
3. Discover Lookalike Audiences
Lookalike modeling creates a profile of your target audience and identifies people who look and act in similar ways. By analyzing key characteristics, you can find new audiences that are a close match to your target audience to scale marketing campaigns and increase ROI. Essentially, lookalike audiences are an expansion of the customers you already have.
It probably took a lot of work to find the ideal customer, so it makes sense that you would want to identify more like them.
The process of developing a lookalike audience starts with a small pixel placed onto a page, such as a purchase confirmation page. This pixel is a small piece of code that can collect customer data about their web use. Some characteristics it may pull include:
You’ll need to include data from multiple channels when creating this audience. For instance, if your biggest purchasers buy over the phone and you’re only calculating data from digital purchases, you may be missing out on a significant chunk of information. Be sure to collect as many sources as possible when compiling your data.
When you have your lookalike audience, you can target more effectively and bring in more customers you know tend to behave in the same ways as your current ones.
A lookalike audience is never complete. Leaving the program to run and gather more data can help it learn more about your current audience and adapt as needed.
Signals of intent are the context clues and data that tell us what a potential customer is doing. A signal of intent to buy a pair of shoes, for example, might be someone doing a Google search for shoes in their size. Other factors that can contribute to signals of intent include the activity around the search. If they’ve already been searching for shoes for a while, they may be closer to making a purchase. If they’re searching from a mobile device while in a shoe store, they could be looking for a cheaper option or to see if their size is available online.
What the person does next is also a valuable signifier for their intent. If they purchase directly after finding a listing on a website without any previous searches, we know that they may not be the most thorough of shoppers. If this was the start of a long search, we see the opposite is true, and they may be more methodical in their searching. These approaches can tell us more about the individual’s shopping habits.
One of the primary signals of intent is signal keywords. These keywords are part of why companies perform search engine optimization. The goal is to reach customers who already show interest in the item for sale. Core keywords address the topic itself, while adjacent keywords are closely related. Other keyword designations include:
Signals of intent can also relate to current events. If a change in legislation or a new industry development occurs, you can capitalize on that and create outreach to target the customers likely to experience the effects. If you know someone will be looking for information about the issue, sending an email to the right people about the topic can help get you out in front.
With the growth of data and analytics, it is easier than ever before to provide people with a customized shopping experience. People expect targeted ads, emails, product suggestions and more from companies they’ve already worked with, but you can also use personalization to acquire new customers.
Using data can help you offer behavior-based recommendations that give the customer a personal experience and can increase the chances of them becoming a customer or client. Adobe found that almost a quarter of larger organizations think data-driven marketing that focuses on the individual is the single most exciting opportunity for their organizations. These targeted recommendations align with their purchasing patterns and may consider similar audience actions.
For example, if your customer frequently watches video content more often than they read blog posts, you can pull that data from the data management platform with a tool that will suggest more video content for them. Or, if you know a shopper likes handbags, you can suggest these as a recommended product instead of something they’re not interested in.
This kind of personalization can also come into play with the types of goals you are looking to accomplish.
Lotame’s data solutions can improve your customer acquisition strategy and help you balance your CAC and LTVs. Whether you want to develop personalized customer experiences or find new audiences across multiple channels, Lotame can help.
We can assist in collecting, organizing, activating and enriching data segments to use with targeted advertising and personalized content for your user acquisition strategy. Acquisition marketing relies heavily on client data, and we have access to second- and third-party data segments, meaning we can get you more information that helps you learn about your audience and potential clients.
When you need to improve your custom acquisition strategy, contact the experts at Lotame for more information.