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There are two clear ways to ensure that your business doesn’t get stuck in a rut. First, you must keep winning new customers. Second, you must not lose your existing customers.
In other words, every successful business thrives on steady rates of customer acquisition and customer retention.
B2B customer acquisition is a multi-step process and is more complex than customer retention. The acquisition process involves generating leads, nurturing them, and then converting them to paying customers. And this is why having a customer acquisition strategy is essential.
What is Customer Acquisition?
To stay afloat, you need a steady stream of new customers. Customer acquisition means the process by which you target prospects to engage and convert them to paying customers.
Customer acquisition overlaps with marketing, but there are some differences. Marketing aims to generate a buzz or create demand, but customer acquisition aims to drive action as a result of that buzz.
For example, suppose you publish a blog post with a product link as a part of your inbound marketing efforts. Metrics like website visits, click-through rates, bounce rates, and reading time will tell you how your audience is reacting to your content. These metrics will tell you how you are doing on the demand marketing front. But, how many of these readers click on your product link and make a purchase? That is the number you would want to take a look at while highlighting your customer acquisition success rate.
What is Customer Acquisition Cost (CAC)?
Customer acquisition cost (CAC) is the total cost of acquiring a new customer or client. It is the sum of marketing costs, ad spending, events, and everything in between.
On the campaign level, CAC is typically calculated by:
CAC = All marketing costs associated with the campaign / Number of customers acquired from that campaign
Before calculating your CAC, it is best to choose a period of time as your baseline. Let us take that into account and rewrite the formula:
CAC = All marketing costs associated with a campaign over x months/ Number of customers acquired from that campaign during x months
CAC also varies greatly based on your industry, your marketing channel mix, and which platforms your customers use. So, if you can identify the marketing channels which are the most cost-effective and yield the highest number of conversions, you can optimize for low CAC.
Once you understand how you can accurately estimate your CAC, you can use some of these methods to improve your customer acquisition strategy.
How To Improve Your Customer Acquisition Strategy
#1 Plan for the long run
Make sure your customer acquisition strategy is sustainable, i.e., can continue to generate new customers in the long run. For example, you may be running search engine ads for your product pages. These ads will get clicks till you exhaust your ad spend. If you want to keep getting visitors and conversions from these pages, you must also optimize them for SEO so that they show up in organic search results even after the ad budget has run out.
#2 Diversify your approach
The more the merrier. When you use a combination of various acquisition methods, you reach more people and have a greater chance of generating new leads. Diversifying your customer acquisition methods also gives you more flexibility and helps optimize costs.
For example, suppose you started with PPC ads which initially generated favorable results. However, after calculating your CAC, you have now realized that not only was PPC highly competitive and expensive, but the results also stopped coming once the ad budget was spent. At this stage, it is best to stop investing in this channel and reallocate its funds and resources to better-performing channels like SEO, social media, etc.
#3 Leverage referrals and reviews
With referral programs, testimonials, and review forms, you can encourage your existing customers to share positive information about your brand. Word-of-mouth marketing is powerful and can go a long way in attracting new customers for your business. In fact, 91% of B2B purchasers’ buying decisions are influenced by some form of word-of-mouth.
#4 Focus on customer retention
Existing customers make significantly larger purchases than newly-acquired ones. So, when existing customers churn out, it can be a blow to your revenue.
If you have high churn rates, you may be tempted to look for more new ones and energize your customer acquisition efforts in an attempt to make up for the loss. However, a better approach is to focus on your existing customers. Why? Well, they are more likely to buy from you again and spend more than new customers. Besides, customer retention is five times less expensive than customer acquisition.
So, your customer acquisition and retention strategies should complement each other. Instead of treating them as separate tasks, focus on delivering exceptional customer service to both new and existing customers. And once you acquire new customers, continue to delight them and keep them engaged to prevent customer churn.
Revamp Your Customer Acquisition Strategy
To create a successful B2B customer acquisition strategy, make sure you plan for the long run. Remember to diversify your acquisition channels, and optimize CAC based on low-cost/high-yield channels. But, most importantly, focus on preventing customer churn by knitting your acquisition and retention strategies together and delivering exceptional customer experience.