A 5 Step Guide to Better New Customer Acquisition
Competition to acquire new customers is fierce. Sellers are struggling to be heard but the ambient noise is rising.
The solution is to take a strategic approach to new customer acquisition. Sellers need a way to use the right channels to get the right message to the right people.
This targeted method resonates with customers because the seller’s communication is customized to each prospect.
Here, we offer the 5 key steps for doing so. But first, it is important to understand what customer acquisition is and how it works.
What is New Customer Acquisition?
New customer acquisition is the process of moving a prospect through the marketing funnel. This funnel consists of several stages. In the earliest stage the customer is simply gaining an awareness of the product or service. As they move through the funnel they begin to develop an interest in the solution, and then consider the implications of a purchase before finally making the decision to buy.
The Difference Between Acquisition, Marketing, and Lead Generation
These are three different actions that together form a single chain of events leading to a new customer.
Marketing is the first link in this chain. Marketing is a broad term used to describe any activity designed to communicate the value of a product or service.
If the marketing activities are effective, then lead generation is what follows. Lead generation is the act of a person becoming a prospect. Marketing efforts generate a lead when a person becomes interested enough in the solution to engage with the messaging in some way. This engagement may simply be the act of downloading a piece of content, visiting a site or contacting a sales professional.
When the content is strong enough to start a conversation between a sales professional and a customer then the prospect might become an acquisition. An acquisition is simply a prospect that has become a customer.
The Customer Acquisition Funnel
The customer acquisition funnel is a set of stages through which a prospect moves before becoming a customer. There are many interpretations of the funnel. Some organizations build their process around a funnel consisting of four stages. Others use a funnel that includes as many as six stages.
Each successive stage of the funnel involves fewer prospects because more leads abandon their exploration of the product or service as they near a purchase. Commonly, the stages of the funnel from top to bottom are awareness, interest, consideration intent, evaluation, and purchase.
Understanding and Calculating Customer Acquisition Cost (CAC)
The customer acquisition cost is a calculation that tracks the spending required to acquire a new customer.
CAC = (Cost of Sales + Cost of Marketing) / Number of New Customers Acquired
This is an important method for ensuring that dollars are allocated to the actions and channels that are most efficient for attracting new customers.
The calculation reveals the effectiveness of the organization’s lead generation process. The CAC is high when the business must spend heavily to acquire just a few customers.
Some of the costs used in the CAC include employee salaries, ad spend, content creation costs, and inventory upkeep.
The Importance of a Customer Acquisition Strategy
A customer acquisition strategy is what keeps the pipeline full. By developing a strategy the sales and marketing team are able to focus their efforts on a clear, and specific set of measurable goals.
The key is to have a well-defined strategy. Without one the organization will never learn what works and what does not. A strategy is what establishes a set of best practices that drive leads. This, in turn, boosts the morale of the team because they see that their efforts yield results.
5 Steps to Improve Your Customer Acquisition
Following these five steps will help you immediately improve the results of your team's new customer acquisition efforts.
1. Identify the Stages and Characteristics of Your Funnel
Each business has a different funnel. The stages range from four to six. Take the time to identify how many stages your funnel has and what each of those stages are. While the details will vary all funnels begin with an awareness phase and end with a final decision from the customer. This last stage is usually called “decide,” or “purchase.”
Developing a clear picture of your funnel is important because it dictates what actions the sales and marketing team needs to take at each stage. For example, when drafting marketing content the messaging must be relevant to the stage of the funnel in which it appears. The funnel is your map for guiding the customer to a purchase.
2. Maintain the Customer’s Momentum Through the Funnel
It is not enough to define the parts of your funnel. Organizations also need to get strategic about how they will propel customers from one end of the funnel to the other.
This step is critical because moving the customer through the funnel becomes more challenging as they near the end. Each “push” into the next stage requires more work and a more refined message that speaks to the customer’s needs.
Some companies build momentum by using the CTA of each piece of marketing content to propel the customer to the next stage. Additionally, some companies use the top stages of the funnel to address broad topics and the bottom stages to address specific topics.
3. Analyze the “Winning Path”
Building efficiencies means learning to replicate the moves that matter. Therefore, the sales and marketing teams must examine the components of a win. This means performing a complete review of recent successes.
In this review, leaders should ask, what content motivated the lead through the funnel, how many touchpoints were needed, and what medium was most compelling to the customer.
These questions not only reveal what works but also reveal what does not work. Patterns will emerge as leaders conduct more reviews. Leaders can then work to eliminate content or even technology that is ineffective while bolstering the material that resonates with leads.
The practice of performing win/loss reviews is common. What is less common is the process of using the analysis to continually evolve the acquisition process.
4. Match the Message to the Medium
Marketing outreach consists of several mediums. Teams can use white papers, case studies, videos, short slide decks, eBooks, and email to get their message out. An effective customer acquisition strategy means drafting messaging that fits into each of these mediums.
For example, case studies, white papers, and eBooks are all great formats for exploring the granular details of a product or solution. These long-form pieces are also effective for articulating the logical or technical aspects underpinning the product or service.
In contrast, short-form pieces like emails, short slide decks, and videos are all good at communicating the core challenge that your product or services solves.
The key is to pair the right message with the right content. In the early stages of the funnel, customers are more likely to respond to short-form content which communicates the solution characteristics that are applicable to most. In later stages, the customer is more likely to devote more time to in-depth material.
5. Refine Your Understanding of Customer Needs at Each Stage
To move a lead through the funnel you need to gain an increasingly detailed understanding of their needs at each stage.
This is approach is important because leads need to see the solution in the context of their world as they reach the end of the funnel. Delivering on this expectation means getting closer to the customer. With more detailed information the sales professional can be more judicious about what content and messaging they offer.
The process of re-learning the customer’s needs is important for another reason. Often, the customer’s needs at the top of the funnel are different than their needs at the bottom. As the customer learns about the solution they become more analytical about their needs. As a result, they often discover that their true needs are different than what they thought.
The Art & Science of Customer Acquisition
Sales professionals and marketing teams must develop a strategic plan that begins with a clearly defined funnel and a specific description of each stage. From here they must consider the content and tools needed to push leads through those stages.
Contact us to discuss how Richardson Sales Performance can help your team build the process and skills they need to effectively engage and aquire new customers, or click here to learn more about our Sprint Prospecting training program.
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