Here’s a shocking fact: It costs up to 5 times more to acquire new customers than to retain existing ones. Why? Because businesses aren’t acquiring customers effectively.
Your business must avoid common customer acquisition mistakes if you want to cut down on this cost. The primary goal of the customer acquisition process is to increase revenue and grow the customer base.
New clients will help your business expand, increase brand awareness, and gain valuable feedback to improve your products and services.
But most businesses struggle to make a successful customer acquisition strategy. They knowingly or unknowingly make mistakes that could’ve been easily avoided – for instance, clearly defining their audience persona.
This guide will outline the biggest customer acquisition blunders businesses make and teach you how to avoid them.
Avoiding these mistakes will help you create a profiting lead generation funnel and win new customers while retaining the ones you’ve.
Understanding Customer Acquisition
“I look at customer acquisition holistically. It’s not a marketing metric; it’s how a company breathes.” – Jeff Samuels.
What is Customer Acquisition?
Customer acquisition refers to attracting potential leads and nurturing them into potential customers so they buy your product or services.
This process typically involves identifying target markets, creating marketing campaigns, and implementing strategies.
For example, customer acquisition is a SaaS company offering a free trial on its software product to attract new customers.
The total spending into these steps, known as customer acquisition cost (CAC), is expensive. For this reason, 40% of marketers cite limited budgets as their most significant obstacle in customer acquisition.
Importance of Customer Acquisition
Irrespective of how good your business is, you will need to have customer acquisition strategies. A great customer acquisition strategy will lead to:
- Increased sales
- Enhanced brand awareness
- Being able to reach new markets
- Expanding your customer base
- Better market understanding to develop new products and services.
10 Common Customer Acquisition Mistakes That Prevent Your Success
Customer acquisition mistakes can be detrimental to the success of your business. From failing to calculate customer acquisition costs to bad communication, there are several areas where businesses make costly errors.
1. Inaccurate Customer Acquisition Cost Formula
One of the biggest client acquisition mistakes is using the incorrect customer acquisition cost (CAC) formula. Usually, there are two methods to calculate CAC:
Simple formula: CAC = MCC ÷ CA
MCC: Total marketing campaign costs related to the acquisition
CA: Total customers acquired.
These formulas leave out some critical variables that add a lot to your cost. For instance, they don’t include salaries, cost of rental or tools, support cost, or customer success cost.
However, the following formula gives you more detailed information:
CAC = (Marketing Expenses (n-60) + 1/2 Sales (n-30) + ½ Sales (n)) / New Customers (n)
n = Current Month
This will give you a more accurate representation of your customer acquisition cost. Once you have that, you can also look at working out your Customer Lifetime Value (CLV, later down the track.
2. Neglecting Customer Success Costs
Your sales teams play an integral part in executing the following tasks:
- Retaining existing customers
- Acquiring new customers
- Addressing the problems of customers who are not interested in your product or service.
You should include all three aspects while calculating your CAC.
3. Buyer Personas: Knowing Your Ideal Customer
“If you don’t know who your customer is, you don’t know what quality is.” – Erie Ries.
A golden rule to grow a business is to build long-term, meaningful relationships with your customers. You must know them well enough so your products or services are totally aligned with what they need and want.
83% of the companies believe it’s vital to ensure customers’ happiness to get good revenue.
A buyer persona is a fictional representation of your ideal customer based on real data and research. To work with a buyer persona in your business, you should first gather information about your target audience. Do this through surveys, interviews, and data from past sales.
Once you have a clear understanding of who your ideal customer is, you can use this information to tailor your marketing, sales, and product development strategies to meet their needs better.
This might include creating targeted content, adjusting your pricing, or developing new products and services that align with their pain points. You can also use your buyer persona to personalize your communication and tailor your approach to each individual customer.
4. Staying Within Budget
Having a budget that is too tight is another one of the most common client acquisition mistakes because it can limit the resources available for marketing and advertising efforts.
Lack of funding can make reaching and attracting new customers difficult and limit the business’s overall growth.
If the budget is too restrictive, your lead generation strategies might not work efficiently. The result? Your team might face customer acquisition failures, affecting your revenue.
The advice here is to notice where the budget limits certain efforts and if that is restricting you from acquiring new customers effectively. Sometimes you have to spend more to make more.
5. Keeping Company’s Founders Out of Sales Loop
As founders are a significant decision-making authority in a company, they need to have a reality check about their customers and preferences.
It would help if you involved the founders while discussing the sales activities. This gives them new insights to help them sell their products better. They might adjust certain products and services based on feedback from the sales team.
An example of this is when potential customers share very similar reasons for why they can’t/won’t sign up. It might be to do with how the service has been created (perhaps the service requires access to a specific technology that the prospect can’t get a hold of).
In this case, sharing this feedback with founders allows them to decide whether to change the service to make it more accessible to clients so that they don’t need to access that technology to sign-up. That would then clear this friction point and lead to a better customer acquisition rate, as clients would be able to sign-up.
6. Failing To Educate Prospects And Customers
Your business should create knowledge bases, FAQs, helpful guides, and blogs and educate your leads about using your products and services. It’ll help reduce the friction in their minds for purchasing your services and products.
If you focus on educating your prospects and customers about your products and services, it will compel them to take action. Sometimes, the common customer acquisition mistakes aren’t super complex and difficult to fix.
It could really be as simple as providing more information to prospects about what they may potentially buy. That could happen in a more thorough sales script or a better follow-up email.
7. Neglecting To Build Relationships
“A business that makes nothing but money is a poor business.” – Henry Ford
73% of customers consider customer experience a crucial aspect of their purchase.
Building relationships with your customers can help you bring better ROI and satisfy your customers’ needs while gaining a solid foothold in the market.
Neglecting to build customer relationships is another top acquisition mistake you should avoid when onboarding new clients and communicating with potential customers. Make the process seamless and easy for prospects to have their questions answered. Be friendly, charming, and supportive during the sales process.
Ensure your sales team is trained effectively to treat your prospects well. For how to build out a great sales team, read this article next.
8. Not Following Through On The Sales Funnel
If the business does not follow through on each step of the sales funnel, it can lead to potential customers losing interest. To effectively acquire new customers, ensure that the sales team is following through on each step of the funnel and addressing any concerns that may arise.
Not tracking and analyzing the performance of the sales funnel is another one of the top customer acquisition mistakes sales teams make. That leads to a challenge in identifying and correcting any issues that may be causing customers to drop out of the funnel.
9. Not Putting the User First
“Focusing on the customer makes a company more resilient.” – Jeff Bezos
Brands offering a better customer experience can get 5.7 times more revenue than competitors who don’t focus on it. As a business, you must understand that every human has preferences and devise your ideal customer framework.
Focusing on the customer and keeping them first will help you understand the customer’s needs in a better way. With a better understanding, you can personalize your services per their needs. Personalization in the sales process is essential to make customers feel seen, heard, valued, and taken care of.
10. Not Optimizing Conversion Rates
Focusing on conversion rate optimization can improve the effectiveness of your website and marketing efforts and result in more customers and increased revenue.
It also ensures that each visitor is comfortable with their experience on your site and takes the desired action.
Not optimizing conversion rates can lead to wasted marketing efforts and a lower ROI. Also, you might miss out on potential customers who may have been interested in buying but left the landing page without completing the purchase.
4 Killer Tips To Avoid Common Customer Acquisition Mistakes
1. Know Your Ideal Customer
Targeting everyone is one of the biggest customer acquisition blunders you might make, especially when your company is new.
You need to narrow your audiences with detailed targeting. And you can do that by clearly defining your audience persona.
It will help you make your messages more effective and engaging for your target audience. Your focus should be to ensure that everyone in your target audience engages with the content.
2. Attractive Copy and Design
Humans are creatures who are driven by emotions. So, creating an emotional message using simple and eye-catching logos or phrases will help to attract new customers.
Hire a copywriter to craft compelling copy and market your message to smoothen your customer acquisition process. If you cannot yet hire a great copywriter, check out these copywriting tips for beginners to help you get started with your marketing strategy.
3. Engage With Clients On Social Media
Social media helps you connect with your customer more personally and engagingly. By creating shareable content and engaging in conversations on social media, businesses can:
- Build relationships with potential customers,
- Increase their brand visibility, and
- Encourage users to become loyal followers or even customers.
You should always prioritize the customer acquisition channel where your audience hangs out the most. For example, most B2B businesses create content and network on LinkedIn to acquire new clients.
4. Conversion Rate Optimization (CRO)
You will make the biggest user acquisition mistakes if you ignore conversion rates. These rates are used to compare and understand your performances in different marketing channels.
When you get this understanding and figures, you can make new changes and optimize your campaign at various levels for better results.
Customer Acquisition Mistakes: FAQs
What Is The Most Challenging Thing In Customer Acquisition?
Customer acquisition requires a deep understanding of customer needs, behaviors, motivations, and preferences to create meaningful messaging that resonates with customers.
Your businesses must have a well-defined strategy to maximize success in customer acquisition. Finding the most cost-effective way to reach customers is crucial to successful customer acquisition. All of these factors combine to make customer acquisition one of the most challenging aspects of the business.
What Factors Affect Customer Acquisition Costs?
Factors that affect CAC include the cost of advertising, promotional activities, and other marketing efforts used to bring on new customers. Companies must also consider the cost of customer service, sales team salaries, and technology when calculating CAC.
Why Is Customer Acquisition Complex?
The most significant customer acquisition difficulty is finding the right channel mix and reaching the right audience at the right time. Your potential customers will have various touchpoints in the buying journey and marketers.
Constantly changing buying habits, consumer preferences, and market conditions can create complexities in customer acquisition strategies.
Wrapping Up: Fix These Common Customer Acquisition Mistakes
Customer acquisition can be a challenging process. You need a deep understanding of customers’ needs, behaviors, motivations, and preferences. Then, you must invest time and resources into how you market and sell your products and services.
With the right approach, your business can successfully acquire customers and reap the rewards of loyal customers.
Take time to understand your target audience, create attractive copy and design, and engage with them on social media. Optimize conversion rates and track data to adjust your sales process or product/service development for more successful customer acquisition. Scaling With Systems can help if your business struggles to get new leads.
We develop time-tested client acquisition systems to land you consistent clients every month. Book a free consultation call today, and one of our advisors will get back to you shortly.
