Generating income has always been one of the main goals every business owner dreams of, but actually, it is easier said than done. There are a lot of factors and trial business owners are facing before eventually making a profit, one of those, and probably the most common and obvious one, is customer acquisition. Customer acquisition is commonly thought as an outcome of a certain enterprise, but in reality, it is not, in fact, it is a process. A process where you need to consider how you can systematically acquire new or potential customers, the cost of doing so, and everything that follows until you make a handshake or transaction. So, what actually happens during the process of customer acquisition?
There are 3 stages to take note of:
This is the top of the funnel in which the goal of every business owner is to generate awareness and interest in order to have a lead amongst the target audience. It usually starts with a broad audience that may have shown some hint of interest about your brand or products.
This is the middle part of the Funnel in which those leads generated from the top of the funnel are now considering making a purchase, such as, signing up for an email or even just following your account on social media.
This is the final part of the funnel in which businesses will try to offer discounts and incentives in order to fully convert those prospects into customers. It is in fact one of the most crucial stages in the Customer Acquisition funnel.
Customer Acquisition Cost
Since we are done talking about the basics of customer acquisition, it’s time to talk about the costs. This is an important step that will help you determine whether or not your customer acquisition efforts are indeed working. All you need to remember is this formula:
Customer acquisition Cost (CAC) = marketing cost / New customers generated
For example, if your Facebook ad brings 100 customers a month and you spent $500 making the ad, your customer acquisition will be:$500 / 100 customers = $5 per customer (CAC)
The reason why business calculate CAC is to know whether or not their marketing tactics were profitable. Say for example, if each customer has an average spending of $50 on their purchase and your gross margin on each order is 50%, your profit will be $20 on each order:Average Order Value ($50) x Gross Margin (50%) – CAC ($5) = Profit $20
Customer Acquisition Strategies
After learning how to calculate the Customer Acquisition Cost, it is time to learn more about some strategies that might help you get some leads:
1. Use Paid Advertising
2.Negotiate Influencer Sponsorship
3. Build an Email List
4. Start a Referral Program
5. Running Traditional Ads
6. Search Engine Optimization
7. Creating an Online Audience
These seven strategies may be commonly used by big companies, but it is also important to consider that each business may use their own kind of strategy that they think would be more applicable in their place. Customer Acquisition is all about discovering how customers see your brand and why they buy from you, so you may be able to optimize and scale that process. This way your marketing strategies will be more strategically financed and planned which will help you build a steadier business.
If you want to learn more about these strategies, feel free to contact us anytime! Here at Molsoft we will ensure that your business will thrive.