customer acquisition

Having paying customers is the only factor without which no business can survive. Moreover, one can make a far better decision if she knows how much it costs to acquire new customers. Therefore, developing a customer acquisition strategy is one of the critical tasks you need to do for your long-term success.

A world-class businessperson or marketer is always aware of the available options and their costs in relation to customer acquisition. Here, we dig into the term Customer Acquisition Cost, how to measure it, and discuss reliable methods to reduce it.  

Table of Contents

What is Customer Acquisition?

The process of acquiring new clients or customers for a business is called customer acquisition (CA). All efforts to attract potential customers or users and turn prospects into actual customers who pay for your product or service are considered customer acquisition.

Customer acquisition refers to the sales funnel as a whole. It may even be done by your customer support team when they are helping a lead choose your product or service. So, you should have different approaches to reach your prospects at each level of the sales funnel.

Customer acquisition refers to the sales funnel as a whole.

Customer acquisition strategy

Now we know how vital is to attempt to earn new customers. Almost all businesses, no matter how big or small, carry out some actions to acquire new customers, but not all succeed! This is because they don’t investigate the efficacy of their efforts and don’t have a well-developed strategy for customer acquisition.

To avoid wasting time and money on unprofitable activities, you should base your efforts on relevant strategies matching your industry, business type, your targeted customer persona, market research, and your limitations.

The customer acquisition strategy is planning for all activities you do to attract leads, nurture them, and turn them into paying customers. It should be a sustainable and scalable strategy that you can use in the long term.

Also, it should ensure you that it is the optimized way to guarantee the growth of your business. Another advantage is providing it as a document to convince potential investors if that’s something you’re thinking about.

Challenges marketers face

The time when high quality level of service or product was all you needed to operate as a profitable business is long gone. In today’s competitive environment, all businesses struggle to attract enough customers. Constantly increasing sales has also become a hard to reach dream for many marketers and business owners.

You cannot rely on your existing customers and grow without attracting new customers as all businesses are bound to lose some clients over time for different reasons, such as emerging innovations, change in customers’ circumstances or industry shifts.

Let’s review two game changer challenges marketers face this year:

Third-party cookies

The emergence of third-party cookies was like a big Christmas gift for marketers. They could easily reach a huge amount of data about anyone who do some sort of search on the internet. But based on the privacy arguments, third-party cookies are doomed to death and no longer a reliable source for marketers.

As a result, we need to come up with alternative strategies to meet our needs for data. Such data help us provide our audience with the best possible offer. Customer acquisition is one of the main areas threatened by the death of third-party cookies.

Since we have fewer sources of information about our leads. Consequently, you will need more time and budget for your customer acquisition activities and should look for more cost-effective methods.

Economic crisis (COVID-19)

We all know COVID-19 as a disaster to humankind because the loss we have seen in our lives is countless. In many countries, purchasing power has decreased significantly due to rises in prices. Therefore, businesses faced a remarkable decrease in market demand for their products and services.

It means a smaller budget for all marketing activities, as well. In conclusion, business owners are more-conscious about spending their money and need to focus on low-risk marketing strategies instead, with customer acquisition being no exception.

Due to lower purchasing power in post-pandemic society focus is on low-risk strategies and tactics.

Developing a great customer acquisition strategy

To develop a strategy specific to your business, you need to have a comprehensive and precise understanding of your target customer group and have their persona in mind.

Your chosen strategy needs to be one that guarantees your long-term steady growth and sales increase with reasonable expenses.

Steps to create a sound customer acquisition strategy:

1. A comprehensive understanding of your ideal customer persona

The more precise you are in identifying your ideal customers, the less will be your customer acquisition cost (CAC). Knowing their needs and desires will also help you find an effective way of talking to and attracting them. Using CRM software, you can gather rich data about your audience for future activities.

You will be more confident in your decisions if you make them based on in-depth market research, and information from real-world transactions and activities. Remember that market realities can be very far from our own assumptions when it comes to business decisions.

2. Defining goals

It is crucial to know your ultimate goal from the outset. Start thinking about the timeframe within which you want to see the increase in your KPIs. Also, it is necessary to choose realistic and achievable goals.

The goal of a customer acquisition strategy is either minimizing the CAC or maximizing the efficiency of CA activities. So, you should choose the most cost-effective methods. We will introduce some of the best ones later in this blog.

3. Choosing the best channels

Do you know where your potential customers see your brand for the first time? Whether it be your website through organic search, your social media account, or paid ads, that is your customer acquisition channel.

Try to create a complete list of them and measure their conversion rate. Then, sort them based on the most effective and the least expensive ones.

Finally, choose the best channels based on your limitations. But do not limit yourself to one marketing channel because it makes you vulnerable to sudden industrial or technological changes.

4. Developing a strategy for each

There are specific rules to master each customer acquisition channel. You need to learn them well and design a strategy that resonates best with your audience on that channel. Define your KPIs and have an eye on how your competitors are performing on that channel.

Also, it highly increases your efficiency if you find the type of content your audience interacts with most. In addition, try to develop a sustainable and flexible strategy to cope with unpredicted market changes.

5. Communicating with your customer base

Remember to be brief and easy to understand in your first conversation with your audience. You can always provide more information in response to their questions if need be. Stimulating curiosity is one of the great methods of getting people interested.

Be clear about your call-to-actions and have in mind psychology-convincing principles. Do not underestimate collecting feedback from your customers about your customer acquisition efforts. It is worth offering a small gift as an incentive for giving that feedback.

6. Measuring and improving

Tracking your activities can be your best trainer. Furthermore, you will have proof to show that your efforts are working.

Defining metrics, drivers behind your CA results, and methods of calculating them should be some of your duties at this stage. Fortunately, there are many platforms out there that provide services to track and measure KPIs.

Customer Acquisition Cost

The growth of your business depends on two factors. The scale of your potential customers who are willing to pay for your service or product, and how much acquiring them will cost you. As a result, a capable solution to measure customer acquisition cost is necessary for planning and finding the best path.

You need to know how much it costs to convince potential customers to trust you and pay for your product or service (add the element of time, team members, and resources to that calculation). Would it be more beneficial to spend more on gaining new customers? Or whether you should invest more in customer retention instead.

How to calculate your CAC

Measuring CAC gives you the exact ROI of your customer acquisition campaign. You can calculate CAC by dividing the total customer acquisition cost by the number of newly acquired customers. So, the challenge will be recognizing and adding up all the related marketing and sales costs for the selected time. 

CAC = Total customer acquisition cost / Number of newly acquired customers

To decide if the calculated amount of CAC is worth spending, we should compare CAC with the value of each new customer. The value of each new customer is equal to the Lifetime Value (LTV) of your new customer.

LTV tells us how many years, on average, each customer stays with us and how much the new customer spends each year. Since gaining a new customer is 3~5 times more expensive than making a current customer repurchase, as a rule of thumb, the ideal ratio of LTV/CAC is 3.

Ideal LTV / CAC ≥ 3

There is still one more metric to track. To know whether your customer base is growing, you should also know how many customers you have lost during the selected time. This is called Churn Rate. Again as a rule of thumb, your churn rate should not exceed 10% for B2B businesses and 80% for B2C businesses.

Ideal Churn Rate= 10%

How to reduce CAC (Strategies for SMEs)

Here, we introduce a few customer acquisition strategies that would best match a small or medium business and can be used to minimize the CAC of your company.

To reduce the cost of a procedure you should either lower the expenses or increase the outcomes. Regarding customer acquisition cost, the below practices are recommended to fulfill each of the methods:


The high popularity of email marketing is due to its low cost. In addition, you can scale, manage and track your email marketing activities and reduce the required time using email management platforms like MailChimp.

By analyzing the engagements with your emails and conducting short surveys through emails, you can learn a lot about your audience and enrich your database. Do not forget to resend your unopened emails using a new subject line to those who did not open them.

To be confident about legal issues, you can get consent from your audience using different methods such as offering a free document, newsletter sign-up, etc.

Content marketing

Publishing blogs, e-books, videos, podcasts, case studies, and sharing on social media are different forms of content marketing. An outstanding advantage of content marketing is that you can aim at various goals at the same time when creating content.

You can also tailor the same content and share it on different channels. Currently, video is the most engaging form of content. 

Quality educational content makes customers 131% more likely to buy from you.

Having someone with Search Engine Optimization skills is vital for any online business. SEO marketing is a long-term method, but it’s worth the time and effort you put into it. SEO is your roadmap to get closer to the minds of your leads.

A high SEO rank means appearing in organic searches when your potential customers are looking for that kind of information. The frequency of blog posting for a small to medium business is at least once per week.

Publishing skyscrapers instead of simple blog posts are super effective in enhancing the rank of your website as well as attracting new customers. Never sacrifice quality over quantity though.

Social media

No B2C business can ignore social media. A significant portion of your customers is spending time on social media and following accounts of their favorite brands. Also, sharing content on social media does not need any subscription fee. It will however take a lot of your time and effort if you do not have a clear strategy and a content calendar for your everyday activities on social media.

Remember the 80-20 rule to allocate 80% of your content to entertaining or educational content and 20% to promoting your product or service. If your account is active with a high engagement rate, consider Facebook ads and Instagram ads.

Referrals and Influencers

Running referral and influencer marketing campaigns can boost the results of your customer acquisition efforts. Therefore, it is a highly recommended method for small and medium business owners. In fact, in this method, you access the audience of your customers while you only part with a tiny proportion of your revenue.

Bear in mind to choose influencers with a background in the related fields of your business. However, referral campaigns are better in regards to creating word-of-mouth and authenticity. Because in a referral marketing campaign, you invite customers who have already used your product or service and are satisfied with it.

If you do not have enough time to design the campaign and find the right people to join your referral campaign, try an inexpensive solution that makes it super easy for you.

Targeted ads

If you have the budget and wish to go for a more advanced marketing technique, Google ads would be a great choice. Using this method, you put your product or service in front of the prospects when they are looking for a similar response.

The outcomes of Google ads depend on how accurately you have defined the detailed attributes of your leads. Google ads give you immediate results, yet they may not be a very efficient method in countries with high levels of cost per click (CPC).


Conferences, webinars, talk shows, trade shows, and workshops are different forms of event marketing. You need to dedicate some of your resources to hold an event as this technique attracts the attention of your leads and customers.

By event marketing, you create a fun or educational memory for them, so it is super effective for brand awareness, customer acquisition, and word-of-mouth purposes.

Furthermore, the event is an opportunity to receive your potential customers’ contact information and permission to send your marketing emails to quality prospects. You can hold both online and offline events.

After all, if you find CA problematic, you can instead work on improving your customer retention. Since customer retention is far less expensive, it is wise to make it a priority and spend more on retention marketing than customer acquisition.

Now talk about Pukket being a solution that both improved retention of existing community members and brought in new customers through social selling etc.

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