✨  Don't miss out! Register for our Employee Appreciation Webinar scheduled for 29th February.🎖️
✨  Don't miss out! Register for our Employee Appreciation Webinar scheduled for 29th February.🎖️

Register now

Live Webinar: Secrets to Building a Successful B2B2C Growth Flywheel
Save your spot now

Glossary of Marketing Terms

View Glossaries

Customer Acquisition

Customer acquisition is critical for businesses to grow in this competitive market, engage potential customers, and convert them to paying customers. This journey involves various stages and employs various marketing and sales techniques.

What is customer acquisition?

Customer acquisition is a process of gaining prospect leads or customers by involving various strategies that attract customers and make sales which help to expand the customer base and generate revenue for the company to reach the aligned goals. Refining customer strategies allows businesses to expand their customer base and increase loyalty and revenue.

Turn Rewards into Growth   Experience seamless delivery of rewards in over 100 countries with the largest global catalog with Xoxoday! 

Why is customer acquisition important?

Customer acquisition is important due to various reasons:

  1. Business growth
  2. Sustainability
  3. Revenue generation
  4. Competitive advantage
  5. Market awareness
  6. Innovation and critical feedback

  1. Business growth: New customers bring new opportunities and challenges on which businesses can work proactively and gain customers, also increasing their market share, revenue, and overall success.
  2. Sustainability: Customer acquisition helps businesses ensure long-term sustainability and constantly attract new leads and convert them to paying customers; this allows them to minimize customer churn. This reduces dependence on small groups of customers and diversifies the customer base.
  3. Revenue generation: Acquiring new customers represents potential revenue and contributes to the overall sales and profitability of the business; by continually acquiring new customers, companies can increase their sales volume and generate higher revenue.
  4. Competitive advantage: Competitive advantage helps to gain an edge over other businesses, expand market reach, and outperform competitors, allowing the company to capture significant shares and become a leader in its industry.
  5. Market awareness: Customer acquisition activities help gain awareness through marketing campaigns and advertising, creating awareness about the brand's products and services. It also enhances brand visibility and recognition.
  6. Innovations and critical feedback: Acquiring new customers can provide valuable insights and feedback by interacting with customers. Customers can also give a better understanding of their preferences, pain points, and trends in the market, which can improve brand offerings and develop new opportunities.

What are the customer acquisition strategies?

The various customer acquisition strategies are as follows:

  1. Content marketing
  2. Search engine optimization
  3. Referral programs
  4. Social media marketing
  5. Email marketing
  6. Event and network marketing
  7. Target advertising

  1. Content marketing: Content marketing involves creating and sharing valuable content that helps engage potential customers. Content such as blog posts, articles, videos, e-books, and more helps provide insightful content, build trust, and attract customers.
  2. Search engine optimization (SEO): SEO focuses on increasing website rank higher in search results that improve the visibility and organic traffic of the website; businesses can attract potential customers who actively search for products or services; these strategies include on-page optimization, link building, and technical optimizations.
  3. Referral programs: Referral programs incentivize existing customers to refer to their known ones, such as friends, family, or colleagues. They are incentivized by rewards, discounts, or by gaining some other benefits to customers, which can help businesses to gain word-of-mouth referrals.
  4. Social media marketing: Businesses use social media to generate leads, such as Twitter, LinkedIn, and other social networking sites to boost engagement and create compelling content, run ads and build brand awareness.
  5. Email marketing: Email marketing involves sending emails to target customers by personalizing the content and promoting the brand product or services that nurture, build relationships and drive conversions.
  6. Event and networking marketing: Engaging in networking events such as trade shows or conferences helps businesses to spread awareness about the brand and provide opportunities for others to connect.
  7. Target advertising: Businesses leverage target advertising to reach potential customers, which can be done by various channels, including display ads, social media ads, print media, or outdoor advertising, as it helps boost the visibility of the right audience.

What are the stages of customer acquisition?

Various steps of customer acquisition are as follows:

  1. Identify and spread awareness
  2. Establish your goals
  3. Customer acquisition channels
  4. Marketing strategy for various channels
  5. Communicate with customers
  6. Post-purchase

  1. Identify and spread awareness: Initially identify the target audience and engage them to know about the existing business and their product or services to generate through various marketing channels like advertising, content marketing, and social media and grab the attention of potential customers.
  2. Establish your goals: Establish the company's goals while keeping ideal customers in vision and allowing to develop a customer acquisition strategy that guides through the process; the goals should be measurable and customer oriented.
  3. Customer acquisition channels: Identify customers and align them to the goals by conducting market research and the type of engaging content that will meet the brand's needs and result in search pages or paid marketing.
  4. Marketing strategy for various channels: Businesses explore different channels and acquire those that help the most to cater to the ideal customer. Businesses can conduct research and determine the best medium to work.
  5. Communicate with customers: After the potential customers turn into paying customers, take necessary feedback and information that can be done through customer interviews, surveys, or email contact forms. This can enhance engagement and work through their needs and preferences proactively.
  6. Post-purchase: To convert paying customers into loyal customers, stay engaged with them by cold emails or sending them messages offering coupons and discounts. This can help establish a long-term relationship with the customer.

What do you mean by customer acquisition cost, and how to calculate it?

Customer acquisition cost (CAC) is a metric that measures the average cost a business incurs to acquire a new customer, as it helps businesses to understand the effectiveness and efficiency of their customer strategies.

The steps to calculate customer acquisition are as follows:

  1. Identify the time period:
  2. Gather sales and marketing expenses:
  3. Calculate total sales and marketing expenses:
  4. Count numbers of new customers acquired:
  5. Calculate the CAC:
  1. Identify the time period: Decide a specific time period for which CAC would be calculated, whether monthly, quarterly, or annually.
  2. Gather sales and marketing expenses: Complete the costs directly related to sales and marketing activities during the chosen period, which includes the costs associated with advertising, marketing campaigns, sales team salaries, commissions, or tools used for sales and marketing.
  3. Calculate total sales and marketing expenses: Add all the costs identified and get the sales and marketing expenses for the chosen time period.
  4. Count numbers of new customers acquired: Identify the number of new customers acquired during the period, and this may be based on the actual count of new customers or purchases made by new customers.
  5. Calculate the CAC: This is the final step, where total sales and marketing expenses are divided by the number of new customers acquired.

The Formula for calculating acquisition cost is

CAC = Total sales and marketing expenses / Number of new customers acquired

What is the difference between customer acquisition and retention?

Customer acquisition is a process of gaining new customers who are attracted by the marketing or the sales strategies which were aimed to attract them. The primary focus of customer acquisition is on expanding the customer base and generating revenue by bringing in new customers.

On the other hand, customer retention is maintaining and nurturing existing customers to encourage repeat business and foster long-term loyalty. The primary focus of retaining a customer is maximizing the lifetime value of existing customers, enhancing their satisfaction, and building long-term relationships.

What are the challenges in customer acquisition?

Various challenges of customer acquisition are as follows:

  1. Targeting the right audience
  2. Cost-effectiveness
  3. Evolving customer expectations
  4. Increase competition
  5. Measure effectiveness

  1. Targeting the right audience: Identifying and reaching the right audience can be a challenging task as it needs to define its customers accurately and take several strategies to reach and engage with them effectively. If the business is not able to acquire targeted customers, it may lead to wasted resources and low conversion rates.
  2. Cost-effectiveness: Acquiring customers can be costly, especially when businesses depend on paid advertising. So, it is important to find cost-effective acquisition strategies that deliver a positive ROI which can be a huge task for small businesses with a limited budget.
  3. Evolving customer Expectations: Customers have varied preferences that change over time, so it becomes necessary for businesses to cope with the changing tastes and needs proactively and acquire strategies to meet challenges. It is essential to stay informed and keep conducting market research over a certain time.
  4. Increased competition: The competitive landscape in many industries is constantly evolving and becoming crowded. So businesses need to stand out, differentiate themselves from competitors, and find unique value propositions to attract customers.
  5. Measuring effectiveness: Determining the effectiveness of customer acquisition efforts can be challenging without proper tracking and measurement systems; it helps keep track of KPIs and relevant metrics to evaluate success.

How to track and measure customer acquisition in business?

The steps to measure customer acquisition in business are as follows:

  1. Set clear goals
  2. Determine tracking mechanisms
  3. Known and track customer touch points
  4. Monitor conversion funnels
  5. Calculate customer acquisition cost
  6. Continuously optimize and experiment

  1. Set clear goals: Initially, start by introducing the goals and key performance indicators (KPIs) that align with customer acquisition objectives that include metrics like conversion rate, cost per acquisition, or customer lifetime value.
  2. Determine tracking mechanisms: Implement tracking mechanisms to capture relevant data, which includes setting analytical tools, installing tracking pixels on websites, or utilizing CRM systems to track customer interaction and conversions.
  3. Know and track customer touch points: Attribute models help attribute customer acquisition to specific market channels or touch points along with the customer journey. After identifying various touch points, track tools and analyze to measure the effectiveness of each touchpoint and understand their contribution to customer acquisition.
  4. Monitor conversion funnels: Set up conversion funnels to track customer journey from initial awareness to final conversion, as it allows to identify potential bottlenecks or areas where customers drop off.
  5. Calculate customer acquisition cost: Calculate customer acquisition cost by dividing the total acquisition expenses by the number of new customers acquired by a specific time, as this will help companies to assess the effectiveness of acquisition efforts.
  6. Continuously optimize and experiment: leverage the data and insight obtained to refine customer acquisition strategies and test different channels like messaging, offers, or targeting approaches to identify what works best for the existing business.

Resources & Blogs

No items found.

Quick Links

Reward solutions
Branded gift cards