For businesses to flourish, they need to constantly acquire new and valuable customers. The process of bringing in new customers is called customer acquisition and is a part of customer analytics.
While the process sounds simple, actually acquiring customers is a complex process. A company not only needs to bring in new customers, it also has to ensure that the customers produce value, will form a loyal base and reduce costs to Return on Investment, or RoI. The expenses incurred toward acquiring a customer is called customer acquisition cost.
Once a company has acquired customers, it will need to focus on customers retention and customer reacquisition.
But, the question remains?
How do companies acquire customers?
There are various ways a company can acquire customers. They can use various marketing techniques at their disposal, advertise their products on social media and other platforms or use a mix match of different processes.
Although companies can use different ways for the acquisition, many usually follow a three-step process of finding customers, scrutinizing their behavior, and finally conversion.
- Finding new customers: The first step toward acquiring new customers is finding them. Usually, people look for various options when they need any product or services. A company’s marketing team can target customers they know are likely to buy the product or services on offer. These probable future customers would visit the company’s website or its app to learn more about the product or services concerned.
- Understanding customer behavior: The customer’s behavior is key to understanding whether he/she will be valuable for the company. Companies need to see how they interact when mulling on buying their product or services – how long they browse, if they subscribe to alerts and other such prompts.
- Conversion: The final step of the process is conversion. With a click of a button, they have purchased your product are now your customers.
Also read: Improving Customer Satisfaction with Simple Analytics
Importance of customer acquisition process
Strategizing the company’s approach toward acquiring customers is a must, especially if a business is new. Better strategies tweaked to meet the company’s need would help reduce customer acquisition cost, thereby increasing RoI. It is quite essential for companies that are new and do not have an established products or services. In their case, users are more likely to choose a brand or a company they trust.
Larger organizations can also choose to focus more on retaining their loyal or valued customers than rather than bringing them in. Customers retention is much cheaper than acquisition but only company with loyal followers can focus on it.
Customer acquisition cost
One of the things to keep track of in the process is customer acquisition cost, or CAC. This is the price businesses pay to acquire new customers.
For instance, if a company spends $5,000 on a campaign and acquires 100 customers in the process, the CAC would be $50 per conversion.
The CAC for every company would vary but they need to ensure that it is profitable.