How to Develop a Digital Customer Acquisition Strategy
Digital Customer Acquisition is undoubtedly integral to technology business success. Creating a comprehensive digital customer acquisition strategy is imperative to actually achieve the desired outcomes in sales.
What is Digital Customer Acquisition?
Digital Customer Acquisition (DCA) is the ambition to enable people to find your product through a relevant search and as they’re already a warm lead, be convinced of your product quickly and then efficiently onboard themselves. No contact with you, no customer service requirement, just money in the bank.
Scaling (or starting) a technology business means growing and generating new customers consistently and continuously. It is not solely about how to market your business or even having large budgets to spend on campaigns. It’s about a digital customer acquisition strategy that can identify and achieve the outcomes quickly and then continue to work to gain new customers.
Customer Acquisition Costs (CAC)
Budgeting is essential to a good strategy and your potential TAM (Total Addressable Market), and your pricing structure will help determine how much you can spend to acquire a new customer.
Customer Acquisition Cost (referred to as CAC for short) is the price you pay to acquire a new customer. This is usually just the marketing costs and doesn’t tend to include overheads and salaries (unless consultants or specialists are used).
It is pointless to spend £400 acquiring a new customer when they are paying £25 per month and then churn after one year. 400-(25×12)= £100 LOSS. OK, this may be more in the realm of Customer Loyalty (see our section on a company called Saasquatch below for help here), but still, keeping an eye on what you spend to acquire a new customer is essential. You don’t want to break even from acquiring a customer after more than a couple of months.
Carefully plan and to begin with, outline your customer acquisition strategy, which will identify if your customer acquisition costs are too high.
You need to keep your Customer Acquisition Cost as low as possible, for obvious reasons. A low CAC means less spend and higher profits.
Keep revisiting your strategy and recalculating your CAC. Different marketing channels and volumes can affect this meaning you may not have an accurate figure. Was the marketing campaign worth the Return on Investment (ROI)? Like the example above, if it costs you more to bring on a new customer than the generated revenue, then you need to rethink your customer acquisition strategy.
It is simple to work out these costs (when you have all the marketing costs, of course).
Marketing Expenditure / No. of New Customers = CAC
Cut-Corner Digital Customer Acquisition
We see entrepreneurs who do have to juggle a lot of responsibility take the short-cut route to DCA. For instance, you don’t need a full strategy to promote a tweet, LinkedIn or Facebook post. However, from experience, the promise from these forms of ‘quick’ digital advertising rarely pays off. You may also want to do a ‘drip-email’ marketing campaign or purchase a mailing list (not recommended, GDPR nightmare) which you hope may bring quick results.
Over the past few years, the advertising costs on the leading platforms have increased by nearly 50%, and the cost of digital adverts and promotions have risen at 5 times the rate of inflation. You would expect performance to be the result of these price increases, but comprehensive reports have shown the click rate is decreasing.
Digital Customer Acquisition Strategies
The digital strategy focuses on online tactics. This could be social media marketing, email marketing or curation of content all leveraged through SEO but also in the right places that the material can be seen.
We are focusing on the digital element in this piece, but for reference, offline customer acquisition could be simple things like roller banners and flyers, to exhibition stands and sales calls. However, these should always be supported by a well constructed digital strategy that empowers results.
Creating a Customer Acquisition Strategy
The first part is simple. Who is your target market? What does your audience look like?
If you don’t know or at early-stage, start-up level, then you first need to build a Persona. We have a downloadable template for you to use on a previous article here >
From building a persona, you will be able to identify:
Who is your audience?
Where are they?
What are they interested in?
What do they need?
Where do they work?
What character traits do they possess?
Do they have buying power? And if not, who does?
By identifying your audience initially through a persona before your company is big enough to use real data, you will be able to understand the channels that may be more successful for your campaigns. Where do you place your product to best appeal to your target market?
Build a Digital Customer Acquisition Strategy
Your goals will accurately set out objectives that will give you a focus and define your strategy. These objectives need to be realistic and achievable. Asking your persona and identifying how easy the outcomes could be met will answer if your expectations are too high or too low.
Identify Digital Channels
Acquiring customers needs to come through channels. Digital marketing channels can be:
Email marketing (personalised or drip campaigns)
Search Engine Optimisation (SEO)
Paid Advertising (online adverts through Google Adwords, Facebook, Twitter etc.)
Content Marketing (blog articles, FAQs etc.
Using your persona and researching how they would interact with your campaign, you will identify which channels will be more successful and convince people to become your customers.
Adjust Your Strategy & Control Your Costs
Identifying customer acquisition costs (CAC) will be needed depending on the channels you have identified. As you roll out this campaign, you may discover that one channel is costing significantly more than your identified CAC. You will need to react and decide whether to adjust your strategy or your CAC to compensate. If you amend your CAC, then your Return on Investment (ROI) will also need updating.
Ensure that you’re not spending too much money on acquiring new customers and that your strategy yields expected results.
When you have several campaigns completed, you will obviously notice some generate more customers than others. If some campaigns yield poor results, but the CAC remains low, then it is probably worthwhile continuing while you explore other channels. Don’t just cease the campaign as take up is small. You may be able to tweak this strategy as it is operating to achieve better results.
Life-Time Value of Customers (LTV)
The costs of keeping a customer happy are considerably less than the price to acquire new customers. One of our Alacrity graduate companies, Saasquatch are experts in customer loyalty and referral marketing. In fact, they are such thought leaders they have recently founded and accredit a Digital Loyalty Academy. The Academy offers online courses and tutorials to help you design, implement, and maintain an effective customer loyalty strategy for any digital business.
There are still some complimentary seats available on this course (at the time of writing this article), so we encourage you to sign up to this free programme and become experts in retaining customers!
A digital customer acquisition strategy is essential to build a successful and scalable business. Apply different methods and tactics to reach your audience (through personas ), test the channels and techniques you adopt and monitor and analyse the results. Once you start generating new customers, you will be able to identify your customer acquisition costs and begin to reduce them to make your business more profitable.