Customer Acquisition
Business Customer Relationship
Introduction
The goal of every business is to offer goods and services to their customer(s). The success and revenue of any business greatly depend on its customers hence it is imperative that customer satisfaction is closely monitored by business owners and other stakeholders. Customer Relationship Management (CRM) systems have been developed with a focus on maintaining a cost-effective relationship with customers. The CRM process involves the description of customer behavior in a bid to improve customer acquisition, customer retention, and profitability. The CRM process defines the business-customer relationship (BCR) cycle.
Customer Identification/Acquisition
Customer identification involves spotting prospects who are likely to become profitable customers. The use of segmentation and clustering techniques can be employed to create a subset of customers from a pool of prospects or historical customer data. After this step, business stakeholders will map out strategies to persuade consumers to purchase a company’s products and/or services. Strategies like email/mail campaigns, cold calling, and online marketing can be adopted for the acquisition of a customer. The cost associated with the acquisition of a customer can be computed by the use of the expression below:
CAC (average) = Total Amount spent on Salaries and Marketing within the defined period.The total number of new customers within the defined period CAC average = Total Amount spent on Salaries and Marketing within the defined period. The total number of new customers within the defined period
The average cost of customer acquisition for most B2B organizations can be evaluated by two factors. They are:
- Organic CAC: This entails the cost of customer addition by the use of search engine optimization (SEO), natural link building, social media posts, email and/or content marketing, and user-generated content.
- Inorganic CAC: The cost associated with the use of paid ads, sponsored ads, display ads, and video ads on YouTube, pay-per-click (PPC) marketing to obtain customers.
A proper evaluation of these CAC types will determine:
- The channel that is most productive and the one to invest more and less in.
- The performance of the organization’s marketing team by comparing its CAC value with the industry benchmark.
Below are tables that show the top and bottom 5 industries by their average CAC value.
Figure 1: Top Five (5) Industries by their average CAC value
Figure 2: Top Five (5) Industries by their average CAC value
Source: Average Customer Acquisition Cost (CAC) by Industry: B2B edition, 2022
The variation of CAC value across these industries is due to parameters such as the length of the sales cycle, purchase value, purchase frequency, customer lifespan, and company maturity.
How to improve customer acquisition within your organization
In the next section, we will consider some ways we can use to boost your customer acquisition cost hence raising the new customer count within a sales period.
Develop specific marketing materials for specific customers
Many companies purchase prospective contact lists from sources like Experian and Wunderman and fail to perform their due diligence before running their marketing campaigns. Most prospective lists are generated by collecting customer data from webinars, and live events. These details were provided in exchange for helpful resources. Your marketing team can review the list by comparing the information on the list with an online directory (LinkedIn). With the use of the name, addresses (email or physical), and even their birth dates, you can develop target audiences where you can offer these groups specific marketing materials (unique ad personalized content). This approach will boost conversion and sales as well as reduce the CAC cost.
Use multiple channels to recruit new customers
The use of multiple channels presents your organization with several tools that can be used to enhance conversion. Company websites, email marketing, social media, sales calls, webinars, affiliate marketing, influencer marketing, content marketing, and paid ads are various channels available for customer acquisition. Based on your industry type and target audience, you can prioritize the appropriate channels for your campaign. There is a need to measure the performance of each channel on a particular campaign. The metrics that can be used to access performance can be click-through rate, bounce rate, exit rate, and calls to action. Drop poor-performing channels and increase the marketing cost of high-performing channels.
Improve your mobile/web app UI/UX
The use of A/B testing on your mobile/web UI/UX can raise your customer conversions. The user experience (UX) is designed to address the user interaction on the app’s interface while the user interface addresses the app’s design (fonts, colors, buttons, and forms). When users access your products/ services via the web or mobile app, the UI/UX will make impression on your users.
Split testing different versions of your landing pages can be used to observe customers’ behaviors when they land on them. These tests should be carried out within a short period of time (on or less than 14 days). There’s a need to use familiar design patterns. The use of simple and familiar design patterns on the web/mobile environment makes the product usable and convenient. When users can easily navigate through the apps, there is a high chance of sale conversion.
On the UI, users can make purchases easily when there is a clear call to action on the pages. Call-to-action buttons are the gateway to user conversion hence UI designers/developers must ensure these buttons are clearly labeled.
With a clear understanding that content that will engage the users is mainly text. There is a strong correlation between concise product descriptions and sales conversion. Employing different fonts in a bid to improve the communication between you and the user is welcomed. The use of graphic elements and videos will give your content a lift if they are deployed optimally.
UI/UX developers can use the white space concept to ensure the pages are not loaded with too much content else the users may be overwhelmed and may bounce out of the app.
An integral part of providing a responsive user experience is page loading time. A study suggests that there is a direct relationship between user duration on a website (user’s patience) and loading time. The finding shows that most users will only wait for 5-10 seconds for a site to load.
Figure 3: A correlation between loading page and users’ patience (Data from
http://blog.kissmetrics.com/loading-time.
Adopt the use of artificial intelligence to acquire customers
The introduction of artificial intelligence (AI) in business has opened the doors of great possibilities. AI differs from human intelligence due to its ability to rapidly process data into information into insights.
With the right application of AI technologies, companies have altered the way they operate. This helps them to sustain margin pressures and meet customers’ ever-increasing expectations. Below are different ways business owners can apply AI in customer acquisition.
Prospects Pre-Qualification
Every business will always prospect. All prospects will not evolve into customers due to different reasons. To ensure the business attracts the right prospects who will become customers; business owners must focus on the right audience, and provide effective marketing schemes and effective calls to action. With the use of AI techniques like clustering, data scientists can observe the common characteristics of prospects who became customers. The findings of such an exercise can position to replicate the acquisition. With the use of machine learning methods like logistics regression, business owners can better understand the marketing channels that tend to deliver customers.
Personalization
The degree to which information is tailored to the needs of a single user is known as personalization. Recent studies reveal that there is a strong correlation between a high level of shopping interest and personalized user experience. Retailers are implementing AI technology to personalize services and product recommendations by processing customers’ previous purchase activities (cart abandonment, clicks, reviews). AI-enabled personalized user experience usually prompts the users’ perception of service quality as well as their commitment to the business. With a deep dive into data analytics on the customer database, the business owner can observe each customer’s behavior (response) at several stages of the business sales cycle and other related activities (promotions, returning products).
This approach enables the business owner to predict individual customer needs and potentially satisfy them.
In this piece, we introduced the concept of the business-customer relationship. We had a deep dive into customer identification and acquisition. We explored different ways in which business owners can reduce the costs associated with acquiring new customers. In the next article, we will focus on customer retention and evaluate several options for keeping these acquired customers.
