Customer Acquisition

Customer Acquisition

We all have heard the proverb “Work smarter, not harder”. It applies in various spheres of our day to day life. One of the key prominent area, where it is most talked about is in the art of customer acquisition.

The cost of acquiring new customer base has increased by over 50% and the loyalty of the customers to the brands are no more like it used to be before. So, it has become all the more challenging task for the companies to retain the customer base and hence the cost of customer acquisition is always a topic to be pondered upon. That does not mean that the companies should give up on this aspect completely. The point is that the companies should take this as a high priority task and brain storm on the strategies and approaches which can be applied to improve the situation.

Before we jump into the solution and other areas which are after effects of the very topic of the day, let us first understand what this customer acquisition is all about.

Customer acquisition is important for businesses of any age and size. It allows your business to 1) make money to meet costs, pay employees, and reinvest in growth, and 2) show evidence of traction for outside parties such as investors, partners, and influencers. Being able to systematically attract and convert new customers keeps companies healthy and growing — and investors happy.

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There is always a confusion between terms ‘customer acquisition’ and ‘lead generation’. To simplify, in the business world, we visualize the customer journey typically with the stages in the buying process and the mindset of the prospect.

As consumers move through each stage to become buyers, they:

  • Gain awareness about your brand
  • Add your product or service to their consideration pool
  • Make a decision to become a paying customer of your business.
  • To simplify the process, lead generation typically happens at the beginning, lead acquisition happens in the middle, and lead conversion happens at the end. And customer acquisition typically refers to the entire process as a whole.

Customer Acquisition Cost (CAC)

One more important aspect which we need to be aware of is the customer acquisition cost (CAC). Customer acquisition cost (CAC) is the cost associated with bringing a new customer or client to your business, such as marketing costs, events, and advertising. It’s typically calculated in reference to a specific campaign or window of time. CAC is important because it assigns real value to your marketing efforts and allows you to measure your ROI – a metric inquired about by CEOs, managers, and investors alike.

How to Calculate Customer Acquisition Cost

High-level customer acquisition cost is calculated by dividing marketing costs associated with a specific campaign or effort by the number of customers acquired from said campaign.

This CAC formula is-

  • CAC = MC / CA, where:
  • CAC is customer acquisition cost
  • MC is marketing costs
  • CA is customers acquired

To get a more in-depth, accurate look at CAC, you must include all costs associated with marketing spend, including everything from campaign spend to marketing salaries to the cost of the staples used to create those lengthy contracts.

This CAC formula looks like:

CAC = (MC + W + S + OS + OH) / CA, where:

  • CAC is customer acquisition cost
  • MC is marketing costs
  • W is wages for marketing and sales
  • S is marketing and sales software
  • OS is outsourced services
  • OH is overhead for marketing and sales
  • CA is customers acquired

Ways to minimize CAC

Here are few ways to minimize the cost of CAC :

Improve your website conversion efforts. Enhance your calls-to-action, ensure your site is mobile and tablet responsive, optimize your landing pages, and clean up your copywriting. Consider A/B testing a landing page or shopping cart to see if a certain design or copywriting angle works best. These will make sure any customer acquisition methods you’re already employing are working as perfectly as possible.

Boost the value of your current customers. This may involve releasing a new product or upgrade in which your customers can also invest in. User value can also skyrocket when they refer other customers or simply act as promoters for your business.

Adjust and optimize your customer acquisition strategy. Take some time to lay out your acquisition blueprint and see what each method is costing you. Where could you cut back on extra marketing spend or manpower? Costs for specific channels can rise over time, and you can always minimize CAC by finding newer, cheaper channels to invest in. This process also ensures your strategy reflects the most recent marketing trends and remains agile.

Customer Acquisition Strategies

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  1. Increase engagement from unopened emails

Objective: Increase the number of people reading and engaging with the emails that you send to your subscriber list by specifically targeting those that have failed to open them.

How: 48 hours or so after sending an email to your subscribers, go into your email marketing software and find all of the subscribers that received the email but didn’t open it. Resend your email with a completely new email subject to just these people – this gives you a chance at increasing the number of opens of your campaign without looking like you’re spamming subscribers’ inboxes with the same email.

  • Update and republish the old content for ranking boost

Objective: Generate more organic search traffic to existing content that lives on your blog through improved keyword rankings.

How: Within a lot of websites that publish content regularly on their blog, there are often a ton of posts that are sitting really deep in their website’s architecture. This is primarily due to time-based blog feeds – i.e., the older a blog post is, the lower down in the blog feed it will be, until it goes even further down into the various archived pages of the blog.

  • Aligning search intent to content upgrades

Objective: Increase the number of people downloading content upgrades when they’ve come through to content from organic search.

How: Identify the pages on your website that deliver the most organic search traffic, ideally top-of-the-funnel content like blog articles. You can do this within your analytics platform.

  • Integration with other products

Objective: Acquire new customers by leveraging the existing user base of products that you integrate with, offering an improved user experience in the process.

How: To explain how this tactic can work well I’d like to showcase one of the masters of this: Zapier. For those of you that don’t know, Zapier is a platform that focuses completely around connecting apps together in order to create unique value from them. Zapier’s whole business revolves around leveraging integrations and it’s primarily how they’ve scaled the business to date. From here you can shortlist solution providers and evaluate who would add the most value from a customer acquisition point of view. Things to consider when evaluating potential integration partners are:

  • Their total customer base.
  • The likelihood that their customers would be interested in your product.
  • Their online reach (i.e., email list, social followers, etc.).
  • Ease of the integration.
  • Acquire a website and migrate its content

Objective: Rapidly increase organic search traffic, as well as traffic from a range of other channels, through the acquisition of a relevant website, and consequently their keyword rankings.

How: It’s seriously powerful for scaling up traffic growth in a short period of time. Not only that, but it can actually work out to be seriously cost-effective.

  • Create Co-Branded content and share out the leads

Objective: Create a co-branded piece of content that is promoted by both brands to dramatically increase the overall reach of the content as well as leads generated.

How: The scale of success will largely depend on how well your product/service compliments offerings from other businesses. The idea here is that you’ll partner with another company that has a large reach amongst the audience that you’re targeting, but doesn’t directly compete with you.

  • Build and inherently viral mechanism into your product

Objective: Acquire new users through a mechanism that enables existing users to bring them into your product without increasing your customer acquisition cost by any significant amount.

How: Virality is a term that gets banded around a LOT, and more often than not its meaning is largely misunderstood. The core benefit of having virality baked into your product is that you can scale up new user acquisition without increasing your customer acquisition costs (CAC).

  • Set up an affiliate program

Objective: Generate new customers through incentivized referrals.

How: There’s two ways to look at affiliate. The first would be your traditional affiliate program where you give an individual, maybe a blogger, a unique referral link and then every time someone signs up to your product from it, you pay them.

The other way could be driven more by business development partnerships. Let’s say you integrate your product with another company’s product. Then, every time someone signs up to your product as a direct result of the integration, you could give a payout to your integration partner.


When we talk about the famous phrase “Lead by example”, we mean that the precedent always matters. Out of all strategies discussed above, each strategy has it peculiar aspects, But customer retention is the most basic as well as ultimate strategy which will definitely help us acquire new customers and fairly low customer acquisition cost. It is a well-known fact that retaining the existing customers cost much less than acquiring altogether new customer base. And since there is a strong customer retention, chances are high that the brand value and trust built around the brand by these existing loyal customers will automatically acquire new customer base.

There are various strategies of customer retention like reward points, loyalty program, membership benefits etc. The more innovative you are, more likely are the customers to retain and talk about the brand all over.

Customer Retention is the ultimate strategy