Customer Acquisition, and How to Improve It.

Learn About Customer Acquisition Methods and Strategies.

Retail Customer Loyalty Rewards Program definition, benefits, statistics
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Customer acquisition is the lifeblood of any company. It's common sense; you can't make money without customers. You can't grow and prosper without customers. In fact, without customers, you won't have a company at all. So, if you say that customer acquisition is not important, you're underplaying the value of the most vital marketing campaign any business can put out there. 

In general terms, customer acquisition is a name used to describe the process of bringing new customers to a particular brand, product or service. However, actually doing it well is much harder than that. And it starts with the following useful statistic:

It costs five times more to acquire a new customer than it does to retain a current one. 

Imagine that. You're going to spend $5 acquiring a customer for every $1 you spend keeping them loyal to your brand. Armed with that knowledge, it makes sense that you'd want your customer acquisition campaign to be as effective as possible because it's a very costly endeavor. Once you have them, customer retention is way easier and much less costly (and that all comes down to treating customers well and making them feel valued).

This process almost always has costs associated with it, called the ROI, or Return On Investment. While there are many different ways to acquire customers, some methods can be tracked, and others cannot.

The primary goal of customer acquisition is to do the least amount of work and spend the least amount of money, to get as many customers as possible into the fold.

Customer Acquisition Methods

Any form of advertising or marketing is designed to attract people to it and to become brand loyalists. However, some methods are more successful than others, and some can provide the advertising agency or brand the insights they need to know how successful the campaign was.

Above the line advertising, such as billboards, television and radio spots, posters, print advertisements, and cinema spots do a great job of getting the brand in front of millions of eyes. But they rarely close a sale or have methods to track customer conversion.

Through the line and below the line is where the process becomes much more scientific and informative. For instance, a direct mail pack that contains phone numbers or mailing addresses provides the advertising agency with data that can tell them:

  • How many pieces were mailed out
  • How many pieces were opened and responded to
  • How many pieces resulted in a sale, or conversion

However, these days customer acquisition is finding its home in social media, with Facebook and Twitter, in particular, being great resources for outreach. Here, you can target customers and keep them informed of great offers or new product lines. You can make them feel valued, talk one-on-one with people, and share insights that build the brand.

Customer Acquisition and ROI

From the direct mail data mentioned previously, ROI can be correlated, and the agency can know the total cost of the campaign, the response rate, the conversion rate and the cost per customer. This can then be used to inform future campaigns and methods of advertising. 

For instance, in direct mail split tests can be done using a control piece to measure new campaigns. The control piece will be the piece to beat and will have an ROI associated with it such as, say, $12 returned for every $1 spent. The test piece will usually alter one variable, perhaps an interest rate, a different line on the envelope, or a different price point.

When the data comes in, it can be assessed that the new variable either performed better, the same, or worse than the control. This also works in many other areas of the media, including online buys.

If it's the same or worse, then the control piece used remains in place and a new test is performed. If, however, it performs better, such as $13 for every $1 spent, then the new piece becomes the control, and the whole process begins again.

By doing this, the art of customer acquisition becomes more of a science. However, ROI is not the only way to measure success. Some use open rates, conversion rates, or campaign recall studies. Some use web hits or views, like viral videos.

But whatever the advertising or marketing agency has done, it is important to test, probe, and record findings. Some say it's not possible to recreate lightning in a bottle, but a good customer acquisition manager will do exactly that, time after time. And that will make his or her role invaluable to any agency or in-house department.

 The Perils of an Ill-Conceived Campaign

Do not think that the worst that can happen with a customer acquisition campaign is that you don't bring in enough customers. While that's bad, there is an even worse outcome. You scare current customers away or tarnish your brand so badly that no one will purchase your product or hire your services. 

There have been many recent examples of catastrophic customer acquisition campaigns. Perhaps the most egregious came from a Super Bowl spot for Groupon in 2011. In the ad, actor Timothy Hutton takes on a somber tone, as he talks about the troubles Tibet is facing. Then, he gets all happy and says "But they still whip up an amazing fish curry. And since 200 of us bought on, we're getting $30 worth of Tibetan food for just $15."

Not only was this tone deaf and offensive, it had people rebelling en masse against the brand. Customers came out in force on Twitter and Facebook to say how appalling the as was, and that they were never buying from Groupon again (that is an empty threat, but the brand can suffer in the short term). 

Other examples include Victoria Secret's "Perfect Body" campaign, Apple's forced download of the new U2 album, and talking about freckles as imperfections someone out there will love.

All of these had the opposite effect. They were supposed to bring in new customers, but instead, they scared new ones away and made current customers abandon the brand.

So, before you spend time and money on a new acquisition campaign, make sure you are confident that it will do the job it's intended to do.