For Business Owners

The Business Owners Guide to Customer Acquisition

6/7/2021
By
Lucie MacNeill
new-customers

Every business owner wants to increase their customer footfall, whether that’s on the internet, or in a brick and mortar store. As a society we’ve gotten used to the notion that you should only create a product or service that solves a problem for a consumer.  Quite frankly, we’re nailing that, but with all mindsets now adopting this notion, consumers have become a little inundated with good options. As such, customer acquisition remains vital in pulling consumers to your brand in clever ways, even if your product is as ground breaking as say...zero calorie doughnuts. 


This guide will walk you through the intentional process that is customer acquisition, how to increase it, read live examples plus how to measure to ensure the chosen tactics are working.



What is customer acquisition?



customer acquisition is the act of getting new customers to make a purchase with your business


According to the Oxford dictionary the definition of acquisition as a noun, is the act of getting something, especially knowledge or skill etc. Apply this to a business context, pop the word customer in front of it and simply put, customer acquisition is the act of getting new customers to make a purchase with your business. 


Ask anyone and they’ll say, what’s a business without customers and many business owners will regularly ask themselves, how do I get more customers coming through my door (be it online or offline!) and after the COVID-19 pandemic it’s a hot topic. 


To begin, being able to apply customer acquisition as a notion we need to consider it as a goal that is made up of a strategy. When it comes to consumers it’s not one size fits all and business owners must consider the action that is required of the public in order to have a consumer become a customer. Knowing this will help you manage expectations and set realistic goals.


Getting someone to buy a £10 shirt might not be as great an ask as getting someone to sign up to your independent business advice firm costing upwards of £100. Being cognisant of this will ensure you think strategically when it comes to defining how you intend to acquire your customers and stay motivated when it comes to how long this might take you.  


How to increase customer acquisition?


As we mentioned above, in order to win new customers, you need to have a strategy, and a simple way to map this out is to refer to the customer acquisition funnel. The customer acquisition funnel is a framework designed to help track and monitor how successful you are at customer acquisition. The notion of a funnel portrays the linear journey a potential customer will go through before committing to your product or service. 


customer-acquisition-funnel
Source: Web Ascender


There are three stages within the funnel; top of the funnel (TOFU), middle of the funnel (MOFU) and bottom of the funnel (BOFU). Knowing each of these will help you identify areas of your business activities that could use some improvement in order to help move consumers top to bottom. 


TOFU 


It’s all fine and well trying to tell consumers about how your product or service is the best, but it doesn’t account for anything if no one knows you’re in business. You need to make potential customers aware of your brand in order to run a successful business


Build a website: this seems like an obvious one, but it’s worth mentioning, if you’re a brick and mortar business, you don’t need to sell online, but it helps to have a space where consumers can discover your offering and a little bit about the business. 


Social Media: it seems like a no-brainer, but we don’t just mean having a social media presence. Engage with potential customers through it, get people talking and join relevant conversations. Check out our guide on when to post on social media if you’re just getting started.


Grab attention: whether you're online or have a brick and mortar store, being eye-catching and standing out from the noise is a tricky but important tactic to double down on, it won’t matter if you serve the best scones in town if people just keep passing you by. It’s not just about what’s on the outside either, according to our 2020 consumer trends report, we note that consumers are more and more demanding of purpose driven brands, so communicate why you started and what your mission is. 



MOFU 


Consumers may be aware of your brand, but they’re not ready to buy. As a business owner you need to ensure you’re providing all the context they might require in order to help push them over the line. They need to know why to choose you over your competitors.


Provide content: whether it’s on your recently created website (as per our previous recommendation) or through an email or printed brochure, you need to provide context to your offering, what you stand for and what you’re selling. Over 80% of shoppers research their products online before purchasing, so even if you’re not in e-commerce, it’s worth considering.


Provide proof: It goes without saying, having people vouch for your product or service helps with convincing consumers to trust your brand so make sure to build up reviews and testimonials. According to recent research 31% of consumers say they read MORE reviews as a result of the COVID-19 pandemic. 


Check out our tips on how to improve your business Tripadvisor listing here.



BOFU 


Ah yes, the real money maker. Your consumer should be ready to buy. You’ve waved your theoretical flag to let them know you exist, you’ve informed them all about you with some compelling propositions, now it’s time to close and get the consumer to become the customer.


Incentivise: while you may find that your compelling propositions are enough to close the deal, in most cases, you’ll need to provide a little extra finesse to cross the line. Offering new customers special discounts and incentives will encourage them to give your brand a go. There are many tactics to leverage such as a free coffee, 10% off a first order or even a free 30 day trial.



Which leads us nicely to the fourth piece of this funnel pie; After purchase. This part requires a slightly different strategy, you’ve already acquired your customer and now you need to KEEP them. Be wary, whilst we do recommend offering incentives to get new customers, business owners often create additional problems by not rewarding their existing customers and risk damaging customer loyalty. You can read more on this in our Business Owners Guide to Customer Loyalty.





Examples of customer acquisition strategies



Dropbox Referrals


How would you like to see a 3900% increase in user growth? Well that’s exactly what Dropbox did, and they did it in 15 months. Whilst reviewing different tactics to acquire new customers, the owners discovered that their cost of acquisition (we’ll get to that) was greater than the value of their customer value across several marketing channels that they had been testing. After learning through their data that most of their new customers came from referrals from friends, they decided to amplify this. 


dropbox-referral
Source: Dropbox


Reviewing their core value proposition - cloud storage - dropbox decided that with every new sign up driven from an existing customer, each would get extra storage space as a result. And boy did it work, Dropbox users were sending more than 2.8 million invites per month to their friends - we’d recommend reading the full story here, it’s a great read. 


Amazon Free Trials


Offering a free trial is a great way to let your customers interact with a service before having to commit for what might be a long period of time. In 2005, billion dollar company Amazon introduced their Prime Membership program which offered customers a series of perks for an upfront fee. Cautious that consumers might be reluctant, the brand introduced a 30 day free trial to let users see the benefits in contrast to the traditional free account. The tactic resulted in 73% of these users turning into paying customers. 

amazon-prime
Source: Amazon.co.uk



Swipii Cashback


More recently, cashback has become more prevalent when it comes to acquiring new customers and for good reason. Local brick and mortar businesses across Scotland have been signing up to Swipii not only to build customer loyalty but additionally to attract new customers from the existing user base and entice them to visit with unique cashback offers. The approach is a great way for smaller businesses to tap into target audiences that are already in the middle of the funnel and have intent to spend in their type of business but just need a little extra push.

   

reach-new-customers
Source: Swipii.com


How to measure customer acquisition?


The most common way to measure if your customer acquisition efforts have been successful is to look at cost of acquisition. Simply put, how much did you have to spend as a business owner to secure at least one new customer? 


customer-acquisition-cost
Source: Hubspot


Measurement shouldn’t stop there however. Sure this will tell you how much you paid for the customer, but how do you know if you overpaid for that customer, or if you secured a bargain? And what will that tell you about which tactics and channels to prioritise moving forward? 


This is where you should rationalise this cost against the value of one customer, also known as a customer’s lifetime value (LTV). How much is one customer worth to you and over what period of time? Is your product or service the type of thing you only buy once? Or like Amazon prime, do you anticipate your customers will invest their money with you over a longer period of time?


There is sadly no one size fits all here, but if you use these methods to identify a realistic and quantifiable figure for your business, you’ll be able to know which approaches are best for your customer acquisition strategy. 


Why is customer acquisition important?


We’ve explained what it is, how to increase it, different ways of approaching it and how to measure it, but why is it important? 


This seems like a gotcha kind of question, because as we said before, what’s a business without customers? Well, nothing really, but customers no longer just flock to the newest business that’s out there, they have options and information coming out of their ears. Businesses need to be strategic and intentional when it comes to thinking about growing their customer base in order to save time, money and boost revenue.



Own a hospitality business and want to increase customer acquisition? Book a free 15 minute demo with our team to hear how the Swipii cashback app works