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What Is Customer Acquisition & Its Most Common Challenges

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Customer acquisition is a marketing strategy that focuses on getting new customers. The strategy includes increasing brand awareness as well as raising engagement that lead to more sales and profits.  

While that sounds pretty straightforward, the execution is far more difficult. There are too many uncontrollable factors and uncertainties that make creating a successful customer acquisition strategy extremely hard. Because of that, many marketers base their decisions on guesswork and instincts alone, which leads to random results (and burned money). Any success achieved that way will be difficult to repeat.

But you don’t have to leave things up to fate — you can take a more purposeful approach by understanding the ins and outs of how customer acquisition works and learning how you can use the gathered data to your advantage. 

Why a Customer Acquisition Strategy Is So Important

If there are so many uncontrollable factors, does it even make sense to try to build specific processes? Yes! While it’s definitely impossible to lead potential customers throughout the whole marketing funnel as designed (remember, it’s just an ideal scenario), we can still guide them towards as many touch points as possible. 

Awareness Stages

Having a customer acquisition strategy ensures that we’re not going in blind. We know exactly how our brand is represented and where, the communication is cohesive across all channels, and we create diverse content that’s suited to people of different awareness stages. 

  1. Unaware — in this stage, people don’t even know that they have a problem. It’s your job to educate them and explain that yes, back-and-forth emails are a hindrance, or that feeling tired all the time isn’t exactly normal.
  2. Problem aware — here, people are aware of their problem, but they have no idea what to do about it. You should aim for content that people can relate to and say “hey, that’s about me!”. 
  3. Solution aware — then, you provide a solution: here’s what you can do to solve your problem. And we can help you with that!
  4. Product Aware — of course, an average customer won’t trust you just like that and will take a look around at your competitors. At this point, you have to convince them that you’re the best person for the job. 
  5. Most Aware — here’s your customer base that has already invested in you before. They’re the most valuable group to you, so keep them engaged and try to convert them into brand ambass adors. 
What is customer acquisition: 5 levels of awareness

A common mistake is to focus on one or two stages at a time. Many companies keep burning their acquisition budget on brand awareness and in result, neglect their current customers whose Customer Lifetime Value (CLV) could be much higher with proper care.

If your process takes into consideration all the awareness stages, you make sure that you’re not missing any opportunities. You’re able to meet the needs of people in different phases, whether they’re still extending their knowledge or comparing solutions. It’s crucial to look at the bigger picture and aim not only for the quick and direct sales, but also for the long term wins. For example, building a community and running social media accounts might not bring you any direct leads right at the start, but may do so with time.

Identifying Problems

Marketing can be chaotic. There might be several marketing campaigns run at once, many different social media channels that require constant attention, as well as SEO (Search Engine Optimization) efforts to lead that traffic the way we want. Amid all that, it’s difficult to say what really worked and what didn’t. 

For example, you might not be happy about your paid advertising. Your design team spent a lot of time on creating beautiful ads, and you’ve managed to scrape a good enough budget to satisfy Meta. And yet, the results aren’t as great as expected — while there’s indeed more traffic, there are no conversions. That’s very disappointing.

Someone inexperienced would be quick to judge; after all, it’s clear that the paid ads aren’t working. But someone with more experience would look at the situation differently — if traffic increased, the ads did their job. It’s what happens after that’s the issue. For example, people might look around the website and decide that the offered product or a service is not for them, out of their price range, or not up to their liking. So in this case, it might be the website’s fault for lack of conversions.  

To check what really keeps throwing people off, you can use one of the customer acquisition tools, Microsoft Clarity, to see how users behave on your website. 

By understanding your customer acquisition process and all of the little parts that make it, as well as how they depend on each other, you’ll be able to tell where the weakest links are. By properly identifying the issue, you’ll be able to effectively fix and improve your marketing strategy.

Measuring Results

Data is a marketer’s best friend. 

And we don’t mean the one from Star Trek (which we wholeheartedly recommend).

In the times of digital marketing, where most of the magic happens online, clients leave many tracks for us to follow and measure, including:

  • Traffic. Number of visitors to either your website or social media platforms is a good indicator of your brand awareness. It’s important to notice where that traffic comes from, too — whether it’s from organic search, LinkedIn post, or newsletter. 
  • Visit duration. If users stay for long, good! This means your content is engaging enough. Different pages will perform differently, so keep a lookout on which are attention-grabbing and which need improvement. But don’t expect the average to be over 10 minutes — 2–3 minutes is good enough!
  • Bounce rate. If people come to your page and then immediately leave, they might have either misclicked or there was something on the page they didn’t like (or maybe the page loaded too slow). As a general rule, bounce rate over 60% might be concerning
  • Downloads. If many prospective customers are downloading your content — ebooks, reports, white papers, or any other resources — this means you’re on the right track. You offer something people are genuinely interested in, so the only question left is whether it delivered the promised value.
  • Filled-out forms. There are two strategies: you can either create a simple form and aim for higher conversions or a longer one, which will deliver leads of better quality. Because of that, your expectations should vary, but don’t count for more than 10% of conversions
  • Abandoned carts. Actually, abandoning carts happens more often than not, so don’t despair if it reaches up to 70%. Because of that, it might be hard to tell whether the users are just window shopping or are frustrated with the process. So make sure that purchase is simple enough and doesn’t require too many steps (like creating a new account, providing way too much information, and so on).
  • Likes, comments, shares. You can monitor the engagement with your brand based on likes, comments, and shares on social media. Keep in mind that consumers aren’t too keen on following brands, though, unless they keep things spicy with truly valuable or funny content. 
  • Sign-ups. Whether you’ve got newsletters, webinars, or gated content, keeping track of how many people convert will tell you whether the incentive to sign-up is sweet enough. Changing your copy just a bit can bring outstanding results.

And that’s just the tip of the iceberg! You can truly lose yourself in all the numbers, but there’s a crucial thing to remember: don’t measure just for the sake of it. Be purposeful. And most importantly, never lose the sight of your end goal — sales. 

Analyzing

Numbers aren’t the endgame. And while it may be tempting to pop that champagne when the traffic doubles in a month, it amounts to nothing if it doesn’t lead to a raise in sales. You’ve been swayed by vanity metrics — they might look impressive, but they’re not bringing any tangible business results.

So don’t forget to analyze all the numbers with a critical eye and understand what they actually mean.

One of the most important customer acquisition metrics is the Customer Acquisition Cost (CAC), i.e. how much you have to spend to get a new customer. In the case of B2B, the average customer acquisition cost might be quite terrifying — small businesses might have to spend up to $1,500 per client, while those at the Enterprise level will need $15,000.

Is it a lot, or is it a fine price to pay? It’s hard to tell based on just that — you need to take another metric into consideration, the Customer Lifetime Value (CLV), which informs us how much an average client spends during their whole business relationship with us, which can span years, if not decades. Once we have that number, only then can we calculate Customer Acquisition Cost & Customer Lifetime Value (CAC/CLV) ratio, which will give us a much better idea of where we stand.

As you can see, considering the isolated numbers can lead us to wrong conclusions. Instead, we should focus on the bigger picture and see what our metrics mean put together and in different contexts. Be careful before making any drastic decisions! 

Also, you should take into consideration your industry and business type. If you try to keep up with the standards of B2C while working in B2B, you’ll be disappointed with the results. In the same vein, applying B2C marketing tactics in B2B marketing can miss the mark entirely — while the engagement might rise up, don’t count on high conversions.

When you have a proper strategy and processes set in place (in best case scenario, with the help of proper tools and software), you can analyze and measure your marketing efforts, something that’s beloved by higher-ups and stakeholders.

Customer Acquisition Process: Challenges & Difficulties

While there are many benefits to creating your own customer acquisition strategies, it’s certainly not as easy as it may sound. There are many traps and various customer acquisition mistakes that could potentially set you back, so read on to learn what you need to keep an eye out for.

Neglecting Parts of the Funnel

There are three stages to the customer acquisition funnel, which correspond with previously explained awareness stages:

  1. TOFU (Top of the Funnel) — where you spread awareness of your brand and highlight a specific problem through blog posts, newsletters, podcasts, etc. 
  2. MOFU (Middle of the Funnel) — where you educate and propose solutions to the specific problem through guides, tutorials, case studies, etc. 
  3. BOFU (Bottom of the Funnel) — where you convince people that you should be the one to solve that problem for them through consultations, demos, comparison pages. 
What is customer acquisition: marketing funnel

In general, TOFU is the easiest. You slap on some paid ads, hire an agency to run your social media profiles, and run a general podcast that’s loosely connected to your business. As it shows, there are multiple ways of spreading the word of our existence, but in order to actually convert customers, you need to do a little more besides just “Hey, I’m here!”. 

What you need to do is to get cozy with the language of benefits and keep going more and more in-depth on the topic. Sure, a random person might be interested in the “How to Start Automating Your Process” type of content, but someone already in the know will look for more concrete information, like a comparison of two automation tools. So don’t forget to create content that’s tailored to the people across all the funnel stages.

Knowing the Audience

Yes, it might be a bit of a cliché at this point — we’re sure you hear about this all the time — but knowing your audience is fundamental. Being able to tell what their needs, wishes, fears, and capabilities are, is important to tailor your offer to your target audience. So that when they visit your website, they can say “yes, this is for me!”.

One such company, that went against the trends and instead, truly empathized with its target audience, resulted in a jaw-dropping comeback in an industry that was thought to be doomed. What could it be? Barnes & Noble!

Barnes & Noble’s new CEO, James Daunt, based his decisions not on what brings the most profit, but what a book-loving person would do. And a book-loving person wouldn’t settle for exhibiting average-to-outright-bad books in the shop window, even if someone paid an outrageous price for that privilege. He also didn’t agree to any promotional sales and strove to make the bookstores a joy to be in (turns out, turning a bookstore into a coffee shop or a restaurant doesn’t help much). Because of that, B&N managed to completely change its fate, from narrowly missing bankruptcy to opening new shops.

This turnaround was possible only by understanding what the consumers want and forgetting entirely about the quick-win strategies that quench stakeholders’ thirst for a while.

Too Many Tools

The ever-evolving technology is mesmerizing and terrifying at once. People are afraid of being left behind, so they jump on the trends that haven’t even grown yet, hoping that it will pay off in the future. From NFT to cryptocurrency and Metaverse, stakeholders do all they can to outrace everyone else, even when the promises are vague at best.

In the same vein, it’s easy to get excited over each new, sparkling tool that people rage about, especially if they’re aggressively marketed. “Your business won’t survive without this tool” or “all your competitors are already using it” can stress a business owner out. 

Unfortunately, the more you fall into this rabbit hole, the worse you’re off in the long run. By implementing too many tools, you ensure that all the information is spread across too many platforms. This can potentially result in many mistakes made, if you forget about checking out certain documents. While small businesses can get away with such practices, it could be disastrous for bigger companies.

Moreover, if anything changes in your company (internal processes or client information, for example), updating everything will prove to be difficult, and there’s even a higher chance of forgetting to update every single file. 

Last but not least, your employees, especially the future ones, will be confused. If each of them refers to different documents and prefer working on different platforms, this can lead to further disorder. Imagine if someone goes on a holiday leave or quits entirely and someone else has to take over — to make sense of everything, they’ll have to go through tons and tons of tools and documentation, which may contradict each other.

The fewer, the better. Not only will it lower the customer acquisition costs, but also eliminate the number of mistakes and misunderstandings and lead to much smoother customer service and experience.

Doing Everything Manually

While an abundance of tools can be a hindrance, so is the total lack of them. Relying on your own Excel prowess, while surely impressive, can stop being enough in two cases: 

  1. Once your business grows enough that it’s hard to keep track of everything,
  2. Once your own tasks and responsibilities leave you little time for micromanaging. 

At a certain point, as long as you care about growth, you’ll have to put your trust in technology to optimize and automate part of your job. You have to admit it — there are many bothersome, repetitive tasks that are necessary to do, but which aren’t the strict focus in your business. So if there’s an opportunity to get them off of your hands, use it.

Even freelancers appreciate how much they can do in a time’s day once they’ve removed the worst parts of their jobs, such as administrative and financial tasks. But nowadays, software do more than that: they can help you create more efficient communication channels with your clients, streamline your processes, and prepare in advance templates for all your documents as well as canned emails.

Most importantly, you’ll put up a much more professional front to your clients, who’ll get a better customer experience in the form of faster replies, clean documents, and a structured process that makes them think they’re in good hands. After all, hearing “we’ll probably get back to you somewhere in the next week” is not reassuring; but laying down each step of the process with clearly defined milestones and deadlines definitely is.

Neglecting Customer Retention

It’s true that ultimately, we want everyone to fall in love with our brand. We want tons of new customers acquired each quarter, and we’ll do everything to make people sign up for what we offer. But this race for new clients can make us lose on the biggest opportunity there is — in retaining customers. 

The most harrowing challenge in acquiring more customers is convincing them that we are the best choice on the market and that we’re trustworthy. In the times of overall distrust, misinformation and fierce competition, it requires lots of effort (and money) to do that. But if you already have a strong customer base of people who went through the entire customer journey before and don’t require that much convincing — after all, they already know what value you bring. They only need a little push or an incentive to buy from you again. Sometimes a simple reminder is all that it takes. 

Businesses that take into consideration the repeat customers in their overall customer acquisition strategy have a bigger picture in mind. In the subscription business model, for example, if a client wants to annul the service, it’s better to tempt them with a significant discount than to let them go without a fight. And if someone agrees to that, offering them a locked-in price a year later is another good idea. Why? Because we shouldn’t focus on how much the client can pay right now; instead, we should think of the Customer Lifetime Value (CLV). And the longer someone stays with us, the higher CLV.

As a cherry on top, it’s worth mentioning that customer retention can be up to five times cheaper than new customer acquisition. So do keep in mind that customer acquisition refers to retention as well, and include that in your plans.

Marketing & Sales Cooperation

While these two departments are usually separated, they heavily depend on each other. Marketing is needed to increase brand awareness and to improve your customer acquisition — but it’s the Sales who are responsible for closing the deals. If you have a great sales team, but not the marketing one, there won’t be many clients to begin with. And in the reverse case, you can bring in as many clients as you want, but it’ll be all for naught if the Sales representatives are slacking. 

It’s crucial to understand each team’s responsibilities and their limits in order to understand what doesn’t work. Therefore, you can’t blame your sales team for low-quality leads or the marketing one for not getting the assumed profits. Sometimes, the main issue stems from wrong KPIs that make employees lose sight of the real goals. Other times, when these two departments are misaligned on their message, potential customers may feel cheated when the promises turn out to be impossible.

The worst case scenario happens when these two departments get merged together. After all, they have completely different responsibilities and goals — a merge would only muddle all those and neglect some of them. And if the person responsible for the new department favors marketing over sales (or sales over marketing), you can guess what will be prioritized more. 

In order to improve customer acquisition, it’s a good idea to take a closer look at how your teams are doing and whether they work together. If they’re not aware of each other’s actions and are misaligned in their communication, you’re in trouble.

Product & Service

Another big issue that might be hard to pinpoint and especially painful to admit, is the offer itself.

If your marketing team brings you many high-qualified leads and sales are successful at nurturing them, yet the customer churn is staggering, then most probably, the fault lies with your products or services. After all, if people were happy enough throughout their customer journey, but they changed their mind right at the end, something must have gone wrong.

There might be several reasons for that:

  • Faulty communication. If you promised very specific things to your clients but in the end, couldn’t deliver, they’ll jump ships ASAP. You can still save the situation if it’s a case of misunderstanding, but if there were outright lies involved, people will feel betrayed.
  • No value. Maybe people discover that your product or a service doesn’t help them as much as they thought it would. Even worse, it may turn out that it only makes things more difficult.
  • Wrong target. You might tailor your marketing to a specific target group that will stay interested only until they discover that it’s not for them after all.
  • Better competition. There’s also a chance that your competitors improved their offer enough to sway your audience — in that case, it’s best to stay on top of the trends and keep an eye on the market.
  • No support. Maybe your product or a service is fine, but the support is sorely lacking. People don’t know how to use them properly, have trouble integrating them, or they simply have issues they don’t know how to solve. If your support team takes a while to respond or the responses are unhelpful, you know what to do.

Being Impatient

We understand — you want results and you want them now. 

You need to know whether you should keep investing in your customer acquisition strategy or change it. You need to be sure that you’re doing the right thing and not wasting your time with the wrong actions. But unfortunately, to be able to tell whether that’s the right direction, you need to be patient.

Killing specific projects just because they haven’t born fruit in a week is self-destructive at best. You need to let your customer acquisition channels flourish and gain enough traction before drawing any conclusions, just like you need to wait for Google to rank your articles. It’s best to forget about an overnight success entirely. 

  • Podcast: to grow an engaged audience, you’ll need 1-3 years,
  • YouTube channel: to get more than 1,000 subscribers, you’ll need at least a year of steady presence,
  • SEO: you can expect to see results somewhere in between 6 and 12 months,
  • Instagram: you might need 18 months to hit a 100k followers milestone,
  • Medium: to grow an audience there, you’ll need 3-12 months.

The numbers listed above come with some caveats. 

First of all, to even get that far, you need consistent and regular posting.

Secondly, most of these cases apply to freelancers and influencers — and since most people prefer to follow other people than brands, you should expect worse results. 

Last but not least, growing an audience is one thing, converting them into paying customers — another. If your customer acquisition plan ends at growing an audience, your strategy isn’t complete. 

Ready to Create Your Own Customer Acquisition Strategy?

Now that you don’t have to wonder “what is customer acquisition?”, you can create your own evergreen strategy or improve already existing ones. Keep in mind though that all the advice gathered here in this article is rather general — you’ll need to adjust it to your own industry or business model in order to make it work and not let your customer acquisition efforts go to waste. For example, startup customer acquisition strategies might require a different touch than a typical B2C one.

If you’re wondering just how these strategies work in real life and whether practice follows theory, check out these customer acquisition examples. We promise that all of them are real cases and any resemblance to actual persons, living or dead, or actual events isn’t coincidental at all.

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Paulina Gajewska
Paulina Gajewska
Copywriter

Word Designer and Article Developer, devoted to breaking down complex ideas to make Information Technology look simple.

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