Digital Customer Acquisition is undoubtedly integral to entrepreneurship business success. Creating a comprehensive digital customer acquisition strategy is imperative to actually achieve the desired outcomes in sales.
WHAT IS DIGITAL CUSTOMER ACQUISITION?
Digital Customer Acquisition (DCA) is the ambition to enable people to find your product through a relevant search, and as they’re already a warm lead, be convinced of your product quickly and then efficiently onboard themselves. No contact with you, no customer service requirement, just money in the bank. Scaling (or starting) a technology business means growing and generating new customers consistently and continuously. It is not solely about how to market your business or even having large budgets to spend on campaigns. It’s about a digital customer acquisition strategy that can identify and achieve the outcomes quickly and then continue to work to gain new customers. Our entrepreneurship course here at Alacrity teaches first-hand about building a digital business, with less focus on a sales team and more attention spent on DCA techniques. Our graduated companies own business plans will be heavily focused on a digital acquisition strategy to convince investors.
CUSTOMER ACQUISITION COSTS (CAC)
Budgeting is essential to a good strategy and your potential TAM (Total Addressable Market), and your pricing structure will help determine how much you can spend to acquire a new customer. Customer Acquisition Cost (referred to as CAC for short) is the price you pay to acquire a new customer. This is usually just the marketing costs and doesn’t tend to include overheads and salaries (unless consultants or specialists are used). It is pointless to spend £400 acquiring a new customer when they are paying £25 per month and then churn after one year. 400-(25×12)= £100 LOSS. OK, this may be more in the realm of Customer Loyalty (see our section on a company called Saasquatch below for help here), but still, keeping an eye on what you spend to acquire a new customer is essential. You don’t want to break even from acquiring a customer after more than a couple of months. Carefully plan and to begin with, outline your customer acquisition strategy, which will identify if your customer acquisition costs are too high. You need to keep your Customer Acquisition Cost as low as possible, for obvious reasons. A low CAC means less spend and higher profits. Keep revisiting your strategy and recalculating your CAC. Different marketing channels and volumes can affect this meaning you may not have an accurate figure. Was the marketing campaign worth the Return on Investment (ROI)? Like the example above, if it costs you more to bring on a new customer than the generated revenue, then you need to rethink your customer acquisition strategy. It is simple to work out these costs (when you have all the marketing costs, of course). Marketing Expenditure / No. of New Customers = CAC
CUT-CORNER DIGITAL CUSTOMER ACQUISITION
We see entrepreneurs who do have to juggle a lot of responsibility take the short-cut route to DCA. For instance, you don’t need a full strategy to promote a tweet, LinkedIn or Facebook post. However, from experience, the promise from these forms of ‘quick’ digital advertising rarely pays off. You may also want to do a ‘drip-email’ marketing campaign or purchase a mailing list (not recommended, GDPR nightmare) which you hope may bring quick results. Over the past few years, the advertising costs on the leading platforms have increased by nearly 50%, and the cost of digital adverts and promotions have risen at 5 times the rate of inflation. You would expect performance to be the result of these price increases, but comprehensive reports have shown the click rate is decreasing.
If you are an digital product owner or if your company has an digital product that needs to be promoted, please don’t hesitate to contact us for more professional services or suggestion, we are at your disposal by just 1 click away!