Customer Acquisition & Retention

What is Customer 


Customer acquisition is the process of bringing new customers or clients to your business. The goal of this process is to create a systematic, sustainable acquisition strategy that can evolve with new trends and changes.

Customer acquisition is important for businesses of any age and size. It allows your business to 1) make money to meet costs, pay employees, and reinvest in growth, and 2) show evidence of traction for outside parties such as investors, partners, and influencers.

In the business world, we visualize the customer journey typically with a funnel or a similar graphic that highlights the stages in the buying process and the mindset of the prospect.

As consumers move through the funnel to become buyers, they:
  1. Gain awareness about your brand
  2. Add your product or service to their consideration pool
  3. Make a decision to become a paying customer of your business.

To simplify the process, lead generation typically happens at the top of the funnel, lead acquisition happens in the middle, and lead conversion happens at the bottom. And customer acquisition typically refers to the funnel as a whole.

Acquisition Marketing

Acquisition marketing is implementing certain strategies to market your products and services to new customers. It typically requires collaboration and alignment between marketing and customer service teams.

Acquisition marketing is different from other marketing because it specifically targets those consumers who have become aware of your brand and are considering making a purchase. It's also unique in that it actively involves your customer service and success teams.

The key thing is that your customer service team has the same ability to bring on and keep new customers as marketing team does. That's why acquisition marketing is broader than just marketing team.

Sure, marketing team is responsible for developing and releasing new promotional materials that may spark interest in new customers. But it's customer service team that has a direct line to current customers — and current customers can be some of the company's best marketers.

Customer Acquisition Strategies

Customer acquisition methods can be broken up into a variety of different types: paid and free, inbound and outbound, etc. The best methods for your business, however, will depend on your audience, resources, and overall strategy.

Four commonly used methods of acquiring new customers are discussed below:

1.     Content Marketing

Content marketing is an effective customer acquisition method for all types of businesses. Creating new, exciting, and relevant content is a highly effective way to snag your audience's attention and send them to your website.

Also, in a world full of false advertising and dwindling consumer trust, content marketing extends an olive branch by saying, "Here. We love what we do, and we want to share our expertise with you — for free."

When it comes to content marketing, there's really no wrong type of content you can create. Here are some of the most popular types and the resources needed to create them.




Blog writers can be dedicated employees, freelancers, or guest writers. Having a graphic designer and editor on board can help ensure that content is optimized for both search engines and reader experience. Lastly, adding a blog to the website is relatively easy, depending on hosting platform.


eBooks, Guides, and Content Offers

eBooks, guides, and other types of gated offers represent a different type of content marketing because they typically involve created more in-depth, valuable content. To compare, where a blog post might be about five different email subject lines that increase open rates, a similar guide would take a step back and cover the basics of email marketing strategy.

That's why these types of content are also gated, meaning that readers must exchange personal information like emails and names to access the content. Content offers are an important part of customer acquisition and the conversion funnel and can help you get more leads out of your blog and content marketing strategy.

The process of creating content offers is similar to that of the blog but might require more specialized resources. Whereas blog posts typically revolve around a repetitive writing and design process, eBooks, guides, templates, whitepapers, and other downloadable content all carry their own purpose and production process. Again, one can create these with in-house or outsourced resources, but they might require an extra set of eyes and a unique promotional plan.



Video is one of the more complicated forms of content to produce, but with higher-quality cameras becoming cheaper and a plethora of freelancers available, creating videos has become easier. Video marketing as part of a broader content strategy is more about content than quality, though the latter does help in the long run.

Video production typically involves script writing, editing, production, and animation — all of which one can outsource through freelancers or production agencies. Video tends to be the most expensive of the content types, so be sure to preserve your very best content for video ideas. If you simply want to visualize an idea for your audience, you can create a SlideShare as an alternative to video.

The heart of content marketing is connecting with and converting your audience. Because of this, each and every piece of content should be relevant to your readers and include a clear call-to-action. Content marketing is also partially content creation and partially content promotion.

2.     Social Media

Social media marketing is comprised of two methods: organic and paid. Organic social media is most useful for boosting brand awareness, developing a company personality, and sharing content you've published elsewhere (like from your blog or videos). Consider it the gasoline for a fire you've already started using other acquisition methods.
Organic social media also capitalizes on the virality factor, inspiring your customers and followers to help you advertise. Some companies consider organic social media a waste of time, and it can be if you don't develop a solid game plan for its use.

"What networks are you going to leverage, and which ones are you going to avoid?"

"What's your social brand voice and who on your marketing team will be tasked with developing and managing content?"

"Do you have a crisis plan in place?"

These are few questions companies have in using organic social media marketing. Posting organically on social media may seem like shouting into a void, and with 2.3 billion active users, it can sure feel that way. The key is accessing the right networks — and this all comes back to a well-defined audience.

For example, if you're targeting an audience mostly comprised of men, Pinterest would have little value for you as only 16% of men use Pinterest. If your audience is made up of millennials, you should definitely include Facebook, Instagram, and Snapchat in your playbook.
On the other hand, leveraging paid social media may be a better tactic for your business, depending on your budget and audience type. Paying for social media advertisements and exposure is best way to get content in front of your audience, without having to build up a network of loyal followers.
Whereas sponsored posts on Facebook, Twitter, or Instagram simply get your content in front of the right eyes, Facebook Lead Ads allow you to advertise on social media and gather customer information such as email addresses and names. This information can make the difference between a follower and a lead, so if your business is looking to build its list, this might be the acquisition method for you.

3.     Search Marketing

Just like social media, there are also two sides to the search marketing coin: organic and paid.
Organic search marketing is also known as search engine optimization (SEO). SEO, like social media, complements content marketing efforts by optimizing the content so it's more easily found by the target audience.

Think about it: When you Google something, you typically click on one of the first results (if not the very first result), right? The idea behind SEO is to create content that shows up high in the search engine results page (SERP) and makes searches want to click on that content.

SEO is far from an exact science, but there are some proven methods to help the content rank better. SEO best practices involve creating indexable content – content that search engines can read, decipher, and index within a SERP. One can increase content's "indexability" by:
  1. Putting your main keyword in the post title
  2. Adding alt text to your images
  3. Uploading transcripts for video and audio content
  4. Linking internally within your site

SEO is a popular customer acquisition method for a couple reasons: It's relatively easy, and it's very cost-effective. SEO and organic growth have also been reported as the #1 inbound marketing priority for companies around the world.

On the other hand, paid search marketing (pay-per-click, or PPC) is advertising on a Google SERP itself. Instead of (or in addition to) organically optimizing your content, PPC allows you to create a search result and pay for it to show up alongside organic results, theoretically increasing the chances of being found by searchers.

4.     Email Marketing

Marketers build an email list with all that customer information they collect through other customer acquisition methods and they leverage that email list to connect with and convert their customers.
Email marketing might seem like an outdated acquisition method, but it's actually a highly effective way to stay in front of customers and promote quality content, product information, and discounts and events. Email is also a great way to simply connect with audience, whether by sending a happy birthday email or a valuable promotional email.

But what is sent isn't the only important part of email marketing. It's also helpful to keep an eye on list behaviour. For example, when you get a new subscriber, it's safe to assume that consumer is interested in your company and wants to learn more. Certain link clicks in your email can alert to what the subscribers are most interested in. Furthermore, people that unsubscribe altogether can give insight into how the subscribers view emails and the content being shared.

Email marketing is one of the few ways to monitor consumer behaviour without having to ask too many questions. It also provides a direct line into consumer's inbox, unlike social media, search, or content marketing. Outside of direct sales, there's no better acquisition tactic than email marketing that gets to the heart of the individual customer.

Mixing up and experimenting with a variety of customer acquisition methods can also help to learn more about the audience and introduce new tactics to current strategy. Regardless of chosen strategies, always leave room for analysis, improvement, and change — because one never knows when customers may stop responding to the methods or leave altogether.

How to Measure Customer Acquisition

Customer acquisition cost (CAC) is the cost associated with bringing a new customer or client, such as marketing costs, events, and advertising. It's typically calculated in reference to a specific campaign or window of time.

CAC is important because it assigns real value to marketing efforts and allows the company to measure your ROI — a metric inquired about by CEOs, managers, and investors alike.

How to Calculate Customer Acquisition Cost

High-level customer acquisition cost is calculated by dividing marketing costs associated with a specific campaign or effort by the number of customers acquired from said campaign.

This CAC formula is

CAC = MC / CA,

CAC is customer acquisition cost
MC is marketing costs
CA is customers acquired

To get a more in-depth, accurate look at CAC, one must include all costs associated with marketing spend, including everything from campaign spend to marketing salaries to the cost of the staples used to create those lengthy contracts.

This CAC formula looks like:

CAC = (MC + W + S + OS + OH) / CA

CAC is customer acquisition cost
MC is marketing costs
W is wages for marketing and sales
S is marketing and sales software
OS is outsourced services
OH is overhead for marketing and sales
CA is customers acquired

Where the simple CAC metric might apply to a single campaign, the more complex CAC formula should be calculated within a given window, such as one month or fiscal year. For example, if Company A spent $10,000 on customer acquisition in Q4 of 2017 and acquired 100 customers, the CAC would be $100.

CAC can be a fickle metric and shouldn't be the only number used to evaluate marketing efforts. Here are a few things that could throw off the value and application of your CAC:

  • On average, how often do your customers make purchases? There's a major difference between the CAC of an Audi dealership and a Starbucks.

  • Does/did company spend money on marketing efforts that are slated to pay off in the far future? Say you invest in a Q3 campaign but pay for it in Q1. You aren't necessarily going to see new customers right away from that investment, and that might skew your Q1 CAC.

Regardless, CAC is a critical number to calculate (and consistently recalculate) when acquiring new customers and employing new acquisition methods.

Customer Retention Is the New Acquisition

Despite working hard and employing various methods to acquire new customers, sometimes they do leave us. That's the unfortunate motivation behind customer acquisition, though, and it's important to recognize.

What is Customer Churn?

Customer churn represents that percentage of customers that peel away from your business and opt out of your products or services. It's also referred to as customer attrition or turnover.
Why is churn important? Customer churn is what motivates businesses to find and acquire new customers. Historically, as businesses have experienced higher churn rates, they've invested in more (and more expensive) acquisition methods.
Customer retention is the new-customer acquisition, i.e., instead of looking outward and onward for new customers to replace the old, forgotten ones, I propose one to look inward and work to retain customers using new and improved customer service methods.

The funnel is a handy visualization of how customers come to know and buy from your brand, it's lacking in one thing: how the current (and past) customers fuel future customers. When the business circulates around delighting and retaining customers, the marketing strategy starts to resemble a flywheel, not a funnel.

The term "flywheel" describes the momentum one gain when one's company revolves around customer, as illustrated above. That's customer retention in action: working to retain the customers (instead of paying to replace lost ones) is actually an acquisition method in itself — and a cheaper one at that. It's a well-known fact that retaining customers costs much less than acquiring new ones.

Customer Retention Strategy Examples

A mere 5% increase in retention can increase company revenue by 25-95%. 90% of happy consumers are more likely to purchase again, and 93% are more likely to be repeat customers at companies with excellent customer service. These are just a few reasons to establish customer retention strategies — just like customer acquisition ones.

The customer retention strategies you put into action will vary based on your business model, audience, resources, and more. Here are a few examples of customer retention strategies that have worked for other companies.

1. Starbucks: Offer a Great Rewards Program

One of the most common customer retention examples is rewarding consumers for doing business with a brand. Rewards programs encourage customers to return by giving them discounts, exclusive access, or special offers.

2. Amazon: Suggest Related Products

When a customer buys from your brand, you learn about their wants and needs. To boost customer retention, put that information to use. Use the insights to create a list of suggestions for other products the customer may be interested in based on their past shopping activity.

3. Swiggy: Feedback

Asking for feedback from your customers serves two distinct purposes:
  1. It makes customers feel good because company values their opinions.
  2. It gives the company the insight into how customers think and feel.


4. Nykaa: Social Community

The emergence and prevalence of social media have empowered brands to engage in a dialog with their customers with negligible cost and boundless effectivity. Use it to project the humanness of the brand. Connect with people who talk about the brand and provide a platform for them to speak. Add more people to it, create a community that talks good about the brand, reward them and make that community coveted.

Turning Happy Customers into Promoters

Regardless of how you plan to retain your customers, there's one common denominator: providing an amazing customer experience. This is a non-negotiable and means delivering on more than the basic customer expectations.

To turn satisfied customers into promoters, one must aim for customer delight, not just retention. Customers that stick around because they genuinely want to can provide far greater value than increased revenue — they can act as your best marketers, too.

Here's how one can empower one's customers to promote the business and help in saving time and money on other acquisition methods.

1. Ask for customer stories.

Whether through case studies, interviews, reviews, or user-generated content, ask customers to tell their own stories of how they came to discover your business and why they love it. Instead of boasting about company via paid advertising or social media, pass the microphone and let your customers do it.

2. Make content easily shareable.

In the last year, 77% of consumers shared positive experiences with their friends or on social media and review sites. While a happy sentiment can get the message across, wouldn't it be even better if customers were equipped to directly share content you've created, like social posts, blog posts, or graphics? This is called the viral loop, and it's when the customers share content that leads their followers back to your business. Create Click to Tweet links so that your customers can easily share social posts and ensure each piece of published content has options to share via email or social media. The more convenient promotion is for your customers, the more likely they'll engage.

3. Inspire referrals.

Creating a referral program is best way to bring in new business through your customers. Offering incentives — whether credit, physical gifts, or monetary rewards — is usually the best way to motivate a customer to share about the company (and compensate them in return). If you consider a customer referral valuable for your business, you must provide something equally valuable as a trade. While a structured, incentive-based program typically works best for B2C companies, B2B companies might have better luck asking for direct referrals from their customers. Whichever referral strategy you choose, be sure to provide value first and ask questions later. Give your customers a reason to refer you — because they're so delighted by your business, they can't help but share.

Customer Lifetime Value

In addition to knowing the cost of acquiring a new customer, it's helpful to know how much value a retained customer provides your business. Both of these are important metrics to calculate and compare when reviewing marketing and sales efforts.

What is Customer Lifetime Value (LTV)?

Customer lifetime value is the estimated net profit that an individual or business will provide over their lifetime as a paying customer.

Customer LTV is a helpful factor to consider when getting to know your customers and how they interact with your business. It also provides a clear valuation of your marketing and support efforts and helps influence business decisions across the board.

Calculating customer LTV isn't difficult, but it does require defining a few metrics along the way, such as average purchase value and frequency. Even if you have to estimate these numbers, having a solid customer LTV can help you predict how much revenue you can roughly expect a customer to provide throughout their relationship with your business.

By defining customer LTV alongside CAC, companies can figure out just how long it takes to replace each investment made in acquiring new customers — and how to better spend that acquisition budget.


Meenakshi Aishwarya 


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