Every business irrespective of its age or size needs new customers to make its products reach more people and hence run the business profitably. It might be noticed that every business has two types of customers; the ones who splurge well over the products and the ones who visit the platform for free and do not make any transactions.
So how do you convert those ‘free’ visitors of your platform into a potential customer? That’s where the concept of Customer acquisition kicks in.
Customer acquisition is a systematic and sustainable process of bringing new clients or customers to your business. This entire process is concerned with the following considerations: –
- The process should determine and focus on the psychology of the customers.
- It should take into account the way a customer reacts to his/her surroundings and environment.
- Customer’s tendency to buy specific range of products should be considered.
- Understanding of what determines or influences the buying pattern of the customer.
- Apply best strategies to effectively convince the customer to buy the products.
Customer acquisition very much depends on how effectively the organisation builds its relationships with the customers.
Let us understand this with an example:
Suppose you have an account in HDFC Bank and you are satisfied with the services that the bank provides with regards to fund transfers, cash withdrawals, cheque clearances etc, then there are high and positive chances that you would open bank accounts of your family members in the same bank. Here the good services provided will help the bank in getting the new customers. Thus, it is proved that getting new customers highly depends on the relationships built by the supplier with its customers. This will also lead to the growth of business and increase its profitability.
Customer acquisition is important because it allows the business to: –
- Make money to meet its costs and reinvest for the growth of business.
- Attract outside parties like investors, partners and shareholders.
For customer acquisition there are five steps involved to complete the entire process: –
- Acquisition Marketing
- Acquisition Channels
- Measure the customer acquisitions
- Improve customer acquisition strategies
Let us understand the above points in detail:
1. Acquisition Marketing:
Acquisition marketing refers to applying certain strategies to market your product or service to a new customer. It is different from other marketing methods because it specifically targets those customers who are aware of your brand and are about to decide whether to buy the product/service or not. Here, the customer service team should also be equally passionate as the marketing team about the same. Here the duty of customer service team is to maintain good relations with the existing customers because many a time the customers are the best marketers.
2. Acquisition Channels:
Customer acquisition channels are those paths, sources, platforms or strategies through which the companies promote their products or services to the new customers. The various ways it could be done are:
- Content Marketing
- Content offers
- Social Media
- Search Marketing
- Email Marketing etc.
3. Measure Customer Acquisition Cost:
Any investment made should give results in some or the other way. If you are implementing customer acquisition strategies then it is very important for you to see how many customers have been successfully converted into a potential customer and how many of them have made their purchases.
In big organisations where customer acquisition costs are huge, customer acquisition costs are calculated by dividing the total marketing cost incurred in the campaign divided by number of customers acquired from that campaign.
CAC = MC/CA
CAC = Customer Acquisition Cost
MC = Marketing Cost
CA = Number of customers acquired
4. Improve Customer Acquisition Strategies:
Nothing in this world is done perfectly in the very first time, it requires corrections and continuous changes as per the requirements of the latest trends and changes. The changes made should be made in such a way that they are: –
- Sustainable: The customer acquisition strategies should be made in such a way that they are also impactful in long run.
- Flexible: Since the market behaviour, customers behaviour and the world around is continuously changing, the customer acquisition strategies should also be flexible i.e., it should change as per the changes in the market.
- Targeted: Since in these types of strategies many a times there are chances that not all the customers are your best customers, so it may result in waste of resources thus it is important to understand the targeted customers.
- Diversified: It says that you should diversify your strategies and use various acquisition methods so that there is greater chance of getting new customers.
In the last five years the cost of acquisition has increased by 50%. Marketing has become expensive and customers are becoming less loyal and trustworthy. Thus, understanding the correct marketing strategies has become more important. So, use them wisely so that it can give you best results.