Is your brand bringing in new customers? If so, how much is your brand willing to spend on customer acquisition?
According to Statista, global advertising spending in 2022 is projected to reach approximately 781 billion US dollars. In addition, forecast data suggest that ad spending worldwide will reach nearly 885 billion US dollars by 2024.
With the increase in ad spending, marketers need to be tactful and find the right balance between customer acquisition and retention. When it comes to acquiring new customers you have to spend much more than retaining existing ones. Hence, whether it's a small, medium, or large enterprise, all ad, and marketing spending must be optimized.
In this article, we will explore customer acquisition and how to use WhatsApp to acquire customers.
Table of Contents
- What is Customer Acquisition?
- What is CAC?
- How do you Calculate CAC?
- What is the Average CAC per Industry?
- What is a Customer Acquisition Funnel?
- What are Some Acquisition Channels?
- What is a CAS?
- What are some tools that you can use?
- How to Acquire Customers on WhatsApp?
What is Customer Acquisition?
Customer acquisition is a process by which a brand acquires new customers using different marketing efforts. It usually involves three crucial steps namely attracting leads, nurturing those leads, and finally converting them to customers. The purpose of acquisition is to find a repeatable way to attract new customers.
What is CAC?
The total cost that a brand incurs to acquire new customers is called customer acquisition cost (CAC). It is one of the key business metrics that is taken into account to determine the profitability of the business in a specific period.
How do you Calculate CAC?
The formula to calculate:
CAC is = total sales and marketing expense divided by the number of new customers.
Note: Sales and marketing expenses can include advertising spends, commissions, bonuses paid, salaries of marketing and sales team, overhead costs, etc.
Let's take an example.
Jonathan is a marketing manager at Greenfield Ltd. His performance review is due in a few weeks and he is required to determine the CAC over the past year. His annual salary is $50000. Over the past year, he has launched several marketing campaigns, and all costs of each campaign are mentioned below
CAC = 50000 + 5000+ 5500+ 7000+ 4200
1000 + 1500 + 2500 + 900
= 71700 /5900 = $12.15
What is the Average Customer Acquisition Cost per Industry?
CAC can vary due to multiple factors such as purchase value, frequency, customer lifespan etc. Here’s a list of average CAC based on industry:
✅Travel = $7
✅Consumer Goods: $22
✅Marketing Agency: $141
✅Technology (Hardware): $182
✅Technology (Software): $395
✅Real Estate: $213
What is a Customer Acquisition Funnel?
Consumer behavior is rapidly changing. With such dynamic changes, it is essential for brands, to constantly upgrade their sales funnel. We all love convenient shortcuts such as using ready-to-use templates to power acquisition. However, creating a result-driven acquisition funnel is quite the task. It requires personalization, optimization, and repetitive revisions. But like everything else, the answer is always in the beginning. It starts with how a user is interacting with your brand and the messages they come across while discovering your product.
Customer acquisition funnel can be defined as the process that allows brands to monitor and track the effectiveness of their acquisition strategy. It is a model that represents the customer’s journey from the awareness stage to the conversion stage. It also helps a brand reassess its strategy and take necessary measures to ease the shopper’s buying journey.
The acquisition funnel begins with mapping out the customer journey. It can help a brand understand where the customer is getting stuck and make strategic changes to ensure a seamless journey. A customer goes through several stages while purchasing a product. These include:
✅Recognizing what they want
✅Researching for sources and information
✅Evaluating and comparing options
✅Evaluation of their purchase
Every stage demands specific interactions to move the prospective buyer through the funnel. In the awareness stage, the customer expects to know everything about the product. Hence, brands can power this stage by sending how-to videos, real-life applications, and what other buyers are saying about the product. Once the customer becomes aware, they can move forward with the next stage i.e lead acquisition. This stage allows the buyer to interact with your brand and decide whether they want to invest. The next and final stage is where the buyer converts and decides to pay for your product or service.
For every part of the funnel, a brand must create strategic content that caters to what the customer is looking for. For instance, the first part of the funnel (awareness) must be about creating general content for the wider audience. You can send a message greeting the customer along with an instructional manual to educate the customer about the product. The second part of the funnel must deliver more personalized and targeted content based on the user’s interest. This can include personalized recommendations based on browsing behavior. At the end of the funnel, you should give your customers the final nudge to complete purchase such as a discount coupon to complete the purchase. In case, the shopper has already purchased, you can also encourage them to give referrals in return for cashbacks, discounts or offers.
What are Some Acquisition Channels?
There are multiple ways to acquire new customers. It can happen either offline or online. Some of the most prominent acquisition channels you can leverage are
✅Word of mouth marketing
When determining channels of acquisition, it is essential to carefully consider the channel that can make the biggest impact. For instance, WhatsApp is one of the most used channels of communication. An average user spends 19.4 hours per month on WhatsApp. A brand that interacts on WhatsApp cannot go unnoticed by a user. Hence, a good way to acquire new customers is to send relevant and customized messages based on their interests. Leveraging WhatsApp marketing campaigns can go a long way in building meaningful relationships beyond acquisition.
To determine which channels might work best for your brand, it is essential to employ experimentation.
Step 1: Develop a strategy around channels that your audience uses and has the highest ROI and run campaigns based on them.
Step 2: Measure the performance of each channel throughout the campaign to allocate resources that shows the greatest potential
Step 3: Run it long enough to arrive at conclusive results
For some businesses, it may work best to opt for online channels whereas some others can benefit from offline channels. Experimenting and then allocating resources based on the results is the best way to choose your ideal channel to acquire new customers.
What is a Customer Acquisition Strategy (CAS)?
A strategy that allow brands to devise an approach to reach and attract customers and convince them to buy a product or service. To build a sustainable business, it is crucial to upgrade your acquisition strategy. In addition to acquiring new customers, it is also essential to focus on customer retention. For any CAS, retaining existing customers plays a major role in sustaining business and promoting word-of-mouth marketing.
Most people will be more inclined to purchase from your brand if they feel their experience is personalized. Hence, a key element of any CAS should be focusing on the customer experience. For instance, lets say a brand uses landing pages to power customer acquisition. Although most landing pages are used for lead generation, they can also be used as a viable method for acquisition. Since the brand’s objective is to acquire customers, the landing page must be designed in a way that incentivizes them to purchase. If let's say your brand is promoting a new product launch, the landing page can highlight the features and the key benefits that the user can get. The user signs up with their email or phone number to enquire about the product and voila you can reengage with them using email marketing or WhatsApp marketing.
What are some Customer Acquisition Tools that you can Use?
Here are some tools that you can use for your business:
Website pop-ups are a great way to catch your visitor's attention. It is a great way to collect emails, and WhatsApp phone numbers, collect form submissions and grow your audience list. These tools also help you assess consumer behavior and target customers who are interested in your product. At Vizury, we connect with your website and track user actions and behaviors. This allows us to understand your visitor’s interest and preference. For example - If they have spent more than 30 secs on a product details page and are going to exit the page, we can understand the action and schedule a dynamic pop-up with latest offers/discounts that captures their either email id/phone number.
The key to great relationships is conversations. You can use chatbots to converse with new visitors and incentivize them to complete a purchase. You can use Vizury’s conversational commerce platform to spark conversations on your user’s preferred messaging channel using AI. AI assisted chatbots are a great way to power meaningful and intelligent conversations that convert. For instance, once a brand has access to customer profiles that outlines customer details, preferences, behavior, it allows brands to send 1:1 personalized product recommendations to drive purchase decisions such as offering a 10% coupon on your LiveChat if the customer signs up for WhatsApp can help you acquire a lead. You can also automate customer support by resolving frequently asked customer queries such as order status, refund status or return status whenever required and improve customer satisfaction.
Referrals are a great way to incentivize existing customers to bring in new customers. You can offer rewards such as discounts, cash, custom gifts, etc every time a new customer sign ups. You can automate your referral program and analyze its results. Referral candy is a customer acquisition software that automates referral programs. It integrates with Shopify, WooCommerce, Bigcommerce, etc.
How to Acquire Customers on WhatsApp?
Here are some tried and tested effective ways to acquire new customers on WhatsApp
#1. Click to Chat Link
WhatsApp offers a click-to-chat feature that customers can click to start a conversation. However, this link must be clearly found on your website. You can embed it on your live chat or you use pop-ups to help users find you on WhatsApp.
#2. Click-to-WhatsApp Ads
Click to WhatsApp ads is a type of Facebook ad that redirects a customer to WhatsApp. Lets take an example. A customer lands on your Facebook Ad that clicks on WhatsApp. He wants to enquire about a shoe. He clicks on the send message button and immediately gets redirected to a chat thread.
#3. Contact Forms
You can use contact forms to receive WhatsApp opt-ins. Once you have collected the contact information of the user, you can start a conversation with your prospect. For example, you can send “Hey Amy, we saw you seeing us. Liked what you saw? Here’s a sneak peek of our newest collection”
#4. QR Codes
They are an excellent way to acquire customers on WhatsApp. Customers can skip all the unnecessary steps and begin a new conversation immediately on WhatsApp. Customers only need to scan the QR which will open a new window where they can ask product-related questions, get support, and more.
For every business, the bottom line remains the same - you need to spend money to make money. However, it is crucial for businesses to assess how all channels are performing and spend smartly. A good customer acquisition strategy can not only help acquire customers but also retain them. The sweet spot is to find the right balance between your acquisition and retention strategies.
Ready to power customer acquisition on WhatsApp? Book your demo with Vizury today.