Welcome to our comprehensive guide to acquisition marketing. Effective customer acquisition strategies are the lifeblood of any successful businesses. To survive in fiercely competitive commercial landscapes, businesses must explore and understand the fundamental tactics and strategies that drive customer acquisition.
In this blog post, we’ll delve into the world of acquisition marketing, in order to understand its core principles. We’ll also focus on two powerful approaches of a successful customer acquisition strategy – Referral Marketing and Brand Partnerships.
At the end of this blog you will:
- Understand acquisition marketing.
- Know some examples of various acquisition channels
- Know how to track and measure acquisition marketing (with formulas of selected metrics included)
- Understand why a customer acquisition strategy is important
- Understand Referral marketing as an acquisition tool
- Understand Brand Partnerships as an acquisition tool
- Be ready to put the principles in practice
Contents
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What is Acquisition Marketing?
Acquisition marketing targets consumers at the consideration stage of the buyer’s journey. It’s the stage before a prospect is converted into a customer. They’ve come across your brand, interacted with it at the awareness stage, like what they see and are considering your products or services.
Acquisition Marketing vs Brand Awareness
It’s easy to mistake strategies that build brand awareness with ones typically used in acquisition marketing. Both types are designed to acquire new customers. However, strategies for building brand awareness are designed to simply capture the attention of customers.
There’s certainly a degree of persuading leads to consider the brand at the awareness stage. That’s why it’s important to understand what actions constitute a prospect climbing the loyalty ladder towards consideration.
Put simply:
| Acquisition strategies for brand awareness: | Focus on prospects at awareness stage (demand generation) |
| Strategies for acquisition marketing: | Focus on leads at consideration stage (lead generation) |
Channels for Acquisition Marketing
Acquisition marketing relies on a variety of distribution channels. Each of these reach potential customers with content, tailored specifically for a targeted audience at the consideration stage. The majority of channels are digital but sometimes they can be more traditional (like mail marketing).
Examples include:
- Brand partnerships
- Blogging
- Email marketing
- Influencers and affiliate marketing
- Mail marketing
- Paid ads
- Premium content
- Referral Marketing
- Social media
- Video and visual media
- Websites
Certain channels will work better for different businesses. It depends on what your business offers, the type of deliverables that resonate best with your customers and whether they complement your business well.
We’ll take a closer look at the various acquisition channels in the near future. For now, let’s take a look at how you can track and measure your acquisition marketing strategy.
Tracking and Measuring Acquisition Marketing
As with any successful strategy, data-gathering and analytical tools are essential. Running an acquisition marketing campaign requires consistent and thorough tracking. This helps you to make data-informed decisions. It also gives you insights as to how and when you should adjust your approach.
For example, you may notice certain content and channels resonate with your target audience more. In this instance, you would abandon less successful tactics in your acquisition marketing strategy, and reallocate resources into better performing channels. Tracking metrics optimises your marketing campaigns as they allow you to make data-informed decisions.
Customer acquisition gets a bad wrap due to its high cost. Consistently monitoring your efforts in acquisition marketing however, will help you avoid wasting resources.
Here are two examples of useful KPIs for implementing an acquisition marketing strategy.
Customer Acquisition Costs (CAC)
You need to consider the costs of acquisition to your company if it’s your main focus. So when it comes to tracking it, there’s no other metric better suited than customer acquisition costs (CAC). CAC is the total cost of acquiring new customers.
How do you calculate customers acquisition costs?
Total acquisition costs include expenses such as advertising and marketing costs; pay-per-click ads, social media ads, digital ads, etc. Sales team commissions and salaries, software or technology, lead generation, and any other expenditures directly related to acquiring new customers should also be factored into costs.
Formula for CAC
CAC in a given period is calculated by dividing the total sales and marketing expenses by the number of acquired customers. The formula is:
Customer acquisition cost = Marketing and sales expenses
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Total number of acquired customers
Customer Lifetime Value (CLV or LTV)
All the time and effort put in your acquisition marketing should pay off in the long term. That’s why we’ve elected customer lifetime value (CLV) or simply lifetime value (LTV) to be the next important metric.
CLV or LTV tells you how much money you can expect to get from a single customer throughout their lifetime (the duration of which they are a customer). After you’ve acquired a few considering leads, track the value they bring to your company. That way, you know for certain that all the effort you’ve put into acquiring this particular segment of your target audience is worth it.
CLV is also a great metric for measuring loyalty, perfect for when shifting to retention strategies.
How to calculate CLV
Set a period of time you want to measure CLV. This could be the first six months the customer was acquired through referral marketing.
Add up the purchase value of every customer in the period you set. Then divide this amount by the total number of purchases made. This gives you the average purchase value:
APV = Total Revenue / Total Number of Purchases
Next, calculate the average purchase frequency (PF) of each customer in the specified timeframe. Divide the total amount of purchases by the number of customers.
PF = Total Number of Purchases / Total Number of Customers
Calculate the average customer lifespan (CL). This is the average length of time a customer stays with the brand and keeps purchasing. You can do this by calculating churn rate:
Lost Customers / Total Customers at the Start of Time Period x 100
Now multiply APV by PF and times that by your customer retention rate (CRR).
All together, it looks like this:
CLV = Average Purchase Value x Purchase Frequency x Customer Lifespan x Customer Retention Rate
Or the easier formula is simply: CLV = customer value x average customer lifespan
Why an Acquisition Marketing Strategy is Important
Customer acquisition gets a bad wrap these days. Too often we focus on its costs in comparison to retaining customers. However, customer acquisition is still important as it gives companies an opportunity to increase their outreach and market share. Plus, as we’ve seen, acquisition can be optimised towards a specific target audience.
Acquisition is crucial for both new and mature businesses. After all, new business is the lifeblood of any business. And whilst there’s certain cons for focussing too much on acquisition, its drawbacks lead to innovative methods of marketing. Namely, acquisition marketing leveraging partnerships and referrals.
| Acquisition marketing | How its useful |
| Partnerships | Useful for driving brand exposure and equity to previously unreachable audiences |
| Referrals | Useful for mitigating CACs for business models that depend or are overly dependent on high rates of customer acquisition |
We’ll look into more ways you can optimise customer acquisition and its benefits to your business goals in another blog. For now, let’s move on to referral and partnerships marketing.
Referral Marketing as an Acquisition Marketing Strategy
Referral marketing is a powerful customer acquisition strategy. Most satisfied customers are willing to refer brands to their friends and family. Since referrals are the most trusted form of advertisement, it’s more likely leads generated this way will convert into paying customers.
Using referrals as part of your overall marketing strategy will drive acquisition due to highly qualified leads. They will be more receptive to your brand at the consideration stage as recommendations leverage trust and credibility. Both of which are crucial for successful acquisition.
Brand advocacy used in an acquisition marketing strategy will also help you build a positive brand equity. Customers love to share their favourite things. It’s a form of social capital amongst their peers. So, if you want to rely on customer advocacy, provide a consistently positive customer experience. You can do this in a number of ways:
Ask for feedback
Let your customers have their say. According to a study by Microsoft, 77% of consumers prefer brands that ask for feedback.
Customer reviews steer the ship towards constant improvement. It’s great to hear good things about your business. Positive reviews certainly drive customer acquisition!
A negative review also has its uses. It helps businesses identify issues with their product or service. Which is just equally as important, particularly when leveraging brand advocacy to drive customer acquisition.
Weak points must be addressed, fixed and maintained in order to keep the level of experience to a standard worth sharing with others.
Encourage sharing
Referrals rely on word-of-mouth, perhaps the easiest way for any brand to boost its exposure to potential customers. Nothing’s more frustrating for brand champions – or the people they recommend your brand to – than an overly complex referral process.
Referring others to your brand should be just as easy as brand advocates talking about it. Referral links should work seamlessly. Whether they appear via email invitation, on social media or on a QR code.
Personalise the process
The customer referral process should be personalised. Create content that’s specific to the brand advocate or the lead in the consideration stage. You’ll have the tracking analytic tools to understand preferences or identify where the individual is on the buyer’s journey.
A brand advocate might bring someone onboard. Yet, the new lead may still need to make that first purchase. You could give your brand champion a nudge. Incentivise them to remind the person they recommended to make their first purchase. Rewards varying from discounts, cash rewards, a free product or subscription period are all effective.
Similarly, your targeted outreach could be exceptional in terms of personalisation. Approach the lead stuck in the consideration stage with some information about their friend or family members. Show the lead they’re missing out on your product or service that their family member or friend enjoys.
Notching up personalised recommendations by linking it to the preferences of people the lead knows, takes social proof to the next level.
According to Epsilon, 80% of consumers make their first purchase after they receive a personalised recommendation.
Brand Partnerships as an Acquisition Marketing Strategy
You can acquire new business through the power of brand partnerships. Look out for businesses whose products or services complement your own. Think gym clubs and protein powder or smartphone companies and a gaming company co-creating an app.
A partner’s paying customer is more likely to consider your products or services as they will feel more relevant to them. Hence why brand partnerships work so well in acquisition marketing.
A study by Forrester reported:
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49% of businesses who implemented partnerships experienced a boost in revenues
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45% reported an increase in brand awareness with a target audience
Partnerships expose your brand to new audiences without the costs of paid advertising. In addition, they help you attract new customers that will naturally be at the consideration stage, due to relevancy, credibility and exclusivity.
How can you maximise the impact that brand partnerships have on your customer acquisition rates?
Reciprocal marketing: acquiring audiences of complementary brands
Finding the ideal partner requires a number of things. First and foremost there should be no conflict of interests. Secondly, both parties should have mutual gain from the partnership. Lastly, you should both agree on the type of partnership you want.
Collaborations could look like partners identifying a demand for one another’s product or service amongst their own customer bases. For example, partners could issue a survey to their customers asking:
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Would you like to see more offers from our partnered brands?
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Would you like a discount code for product X from our partner X?
The first question will give you an answer as to whether your customers are actually interested in the partnered brand. The second question ensures the selected partner resonates with your customers. Plus, it identifies a segment of your customer base that’s firmly in the consideration stage of purchasing from partners.
Celebrate your partners
This might sound obvious but it’s important to celebrate your partners. Remember, you’re not partnering with competitors. You’re co-creating unique and highly relevant regards with brands that complement your products and services well.
Agree on the do’s and don’ts of announcing the partnership before it officially launches. This is where channels for acquisition marketing come into play. You could reveal the partnership in your content marketing or inform audiences in an email list. Whichever you choose is up to you. What’s important is that your audience knows about the partnership.
68% of consumers make purchase decisions after they’ve seen a joint promotional campaign
Not only will you be tapping into leads at the consideration stage in your partner's customer base, all partners involved will gain a fresh influx of leads at the consideration stage too!
Communicate the benefits
Recognise the power of co-created promotions and offers. Over 85% of customers think brands who co-create value are more trustworthy. Of course, transferable brand equity is more of a benefit to the partnered brands.
From a customer’s perspective however, they benefit in a number of ways. They get truly unique customer experiences. Receiving highly relevant rewards and promotions that seemed to have been tailored to them specifically.
Customers adore partnered promotions and offers. Even more so when offers help them in their day to day. For example, offsetting the costs of their food shop or discounts on vehicle insurance.
The messaging behind your offerings should focus on the exclusivity of tangible benefits. By doing this, you and your partners craft a compelling point of difference in your respective markets.
Launch your acquisition marketing strategy
Mastering the art of customer acquisition marketing unlocks unprecedented growth. This is due to targeting specific segments of leads at the consideration stage. By leveraging the power of referrals and partnerships in your acquisition marketing strategy, you attract highly qualified leads at the fraction of the cost of traditional acquisition tactics.
Understanding how to track and measure your acquisition marketing strategy will help you lay down a solid foundation in your journey for more business. In addition, through word-of-mouth marketing and partnerships, you tip the scale towards the sale. Building on unique, relevant rewards, increased credibility and consumer trust amongst fresh audiences.
Get started by checking out our ROI calculator, which includes forecasts for increased revenue by launching a customer acquisition programmes such as referrals and brand partnerships.
ROI Calculator
See How Customer Acquisition Programmes Can Impact Your Business
Enter the size of your audience, average customer value and programme type to see how much you can gain
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