Customer Acquisition Strategy for Startups
As a startup, you face a number of significant challenges. One of the most pressing, of course, is the need to get your business up and running. You need a product or service defined and ready to go. You also need a customer base. There’s no such thing as “build it and they will come” in the world of business. In fact, for most startups customer acquisition is a make or break consideration. What is customer acquisition and what should you know about it?
What Is Customer Acquisition?
Customer acquisition is really nothing more than how you get, keep and grow your audience. It’s about forging customer relationships. That’s it. However, achieving those goals is more difficult than you might think.
Where do you start?
There are two channels that you’ll need to understand – the physical channel and the web/mobile channel.
Physical Channel: The physical channel involves the real world. For instance, let’s say you run a brick-and-mortar shop. A customer calls on the phone, and mentions they saw your ad on Facebook. You talk to them and encourage them to come in. They do that, and you determine how you can solve their problem. They buy your product or service, and then come back for future needs.
This is an example of how you use earned and paid media – newspaper spots count, as do radio ads and more. It’s about building awareness. That’s your first step. Next, you need to build interest. You can track this by the number of phone calls or visits that your business receives.
Next comes consideration – again, this is a measure of those who actually reach out based on your marketing. Finally, we arrive at the purchase stage. This is when they step into the store, pick up a piece of merchandise, and take it to the register.
Web Channel: The web channel is very different from the physical channel. With this, your first step is to use media (content, PPC, SEO, etc.) to acquire customers. Customer acquisition is little more than driving traffic from one place to your website, storefront or mobile app.
Content And Commerce
“Blended” business models are the future for retail as companies are stronger when they have multiple sources of revenue. In the same respect, you can and should use any and all channels, so long as they’re relevant to your audience. Facebook, Twitter, Instagram, email marketing and other channels can all be powerful tools here. Research your audience first and make sure that they spend time in that channel, and that you’re using content that resonates with them.
However, acquisition is only the first step. The phase right after is “activation” – you need to activate your customers so that they take the action you want them to take. That might be paying for a product or service, or it could be signing up for an email list, or just about anything else… and this helps “indoctrinate” them into believing in you as a brand.
Customer Acquisition for Startups – Planning
Customer acquisition for startups starts with planning. You need to know who you’re trying to reach, and how you’re going to reach them. Will you use social media marketing? Invest in PPC ads? Put your money into video marketing? All of these are important tools and they should all have a place in your strategy. In your acquisition plan, you’ll need to focus on the three areas mentioned previously – get, keep and grow.
Get: This is how you actually get your customers and encourage them to buy your product. Often, this is a very challenging step, and it involves understanding your audience.
Keep: Keep refers to actually keeping your customers, getting them to make repeat purchases rather than having to start over from scratch with a new prospect. Churn is expensive, and it costs far less to keep your current customers than to attract new ones.
Grow: Grow refers to building an ongoing relationship with your customers. It’s not a once-and-done sort of thing. It’s a relationship that stretches out over time, with you fulfilling their needs in an ongoing way. This often falls in the category of upsell/cross-sell, since you focus on getting current customers to buy more expensive products—upsell them—or sell complimentary products or services, which is cross-selling.
Understanding the Customer Journey and Your Customers with Personas
Customer personas are idealized representations of different segments of your audience. Each persona should have a personality, unique motivators, specific character traits and more of one segment of your target audience. Use the personas you create to help map out the customer journey through your sales funnel.
When you build your personas, there’s a lot to include about your buyer. You need to understand the other archetypes in the equation. For instance, the flow runs from the user to the influencer, to the recommender, to the decision maker, to the economic buyer, to the saboteur. This is relevant to both B2B and B2C companies.
To use a very simple scenario, let’s talk about selling toys. Your users are children. However, since they don’t have jobs or disposable income, they can’t buy. That means the economic buyer is the parent. Influencers and recommenders in this equation are the child’s friends. The decision maker is the parent, again (the tougher one). The saboteur could be a parent who had a negative experience with the toy in question, or it could be a rival toy maker.
One of the best tools to help you drill down into the bedrock of your audience is to segregate them and then build personas around each segment. Each persona should have a name, “Saving Sally” or “DIY Dan” for instance, as well as characteristics that are embodied in the name, but then expanded in the persona outline.
For instance, while Saving Sally might be frugal, that frugality might be due to a factor like having several children, or saving for retirement. DIY Dan might prefer to do anything he can on his own, but it might be due to a desire to be self-sufficient, rather than a desire to save money.
You also need to dig into the demographics of your audience. Where do they live? What’s the average salary? Did they graduate from college? Do they hold more than one degree? How many children do they have? These are all important questions to answer in order to really build familiarity with your audience. Combine this information with psychographics – their preferred hobbies, personality traits and the like – to build an accurate image of each of your audience segments.
Finally, you need to understand your customers’ pain points. This is a crucial consideration for businesses in any and every industry. Without knowing their pain points, you lack a good understanding of their motivators, as well as the potential roadblocks that might prevent them from converting to a customer. What do your customers find frustrating or urgent that your product or service addresses? These are their pain points.
All of this information should inform your personas, and you need a persona for each segment of your wider audience.
Goals and KPIs
New customer acquisition cannot take place without setting specific goals, and then using KPIs (key point indicators) to chart your progress toward those goals. Customer acquisition for startups should begin by understanding where you want to go – what is your goal? What’s the next one after that, and the one after that?
You also need to know the cost of acquisitions – how much are you paying to move closer to your goal? CAC, or customer acquisition cost, is a vital element to understand, as it will determine what strategies you pursue, which you abandon, and more. Basically, CAC can be calculated by dividing the costs incurred to acquire customers by the number of new customers you acquired during a specified period. Use your KPIs to determine what’s working, what’s not, and what needs to be changed in order to reach your goals. This needs to be done by channel, and those include:
- SEO: Search engine optimization relies on organic search. When your potential customer searches for a specific keyword or phrase, your website should be shown in the results, as close to the top of the page as possible. Determining CAC in this instance would involve understanding the cost of content creation and implementation across all channels where that content is indexed for search.
- SEM: Search engine marketing is part of SEO, but generally applies to paid marketing methods, such as PPC ads. Determining your CAC here hinges how much you’re bidding per keyword, how many keywords you’re targeting and similar metrics.
- Social Media: Social media can be organic or paid. It represents a major opportunity to connect with and build your audience, as well as encourage them to take the next step down the funnel. CAC for social media can be difficult to determine – factors affecting it include paid ads, promoted posts (on Facebook), the amount of time spent posting and engaging with your audience personally, and more.
- Email Marketing: Email marketing is best used once you’ve acquired a customer, and need to activate them. It can combine special offers and lead magnets, video content and a great deal more. CAC for email marketing can involve everything from the costs you incurred getting them to sign up for your mailing list to the cost of video development for use as content, landing page creation for use with your email campaigns and others.
Tracking your CAC per channel is essential, as mentioned. You need to be able to track where your customers are at each stage of the journey, and then scale their experience up to push them toward activation. You also need to ensure that you’re keeping a very close eye on the costs incurred, in comparison to the results generated (customers acquired).
Brand Response and Content Marketing Are the New Customer Acquisition Tools
When it comes to modern customer acquisition for startups, content marketing (blog posts, video, email marketing, etc.) and brand response should be your go-to solutions. If you’re unfamiliar with brand response, it’s a circular marketing method that uses brand building to trigger a response from your audience, and that response further reinforces your brand—or further builds your brand. Ultimately, you need to strike a creative and business balance. Not only should your content and overall brand look great, but your efforts need to perform well, too.
With new customer acquisition for startups, it’s important to understood customer acquisition strategy and to lean into whichever strategy is providing the best results, while constantly monitoring and measuring progress.