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Customer Acquisition Strategy Basics


Everyone in marketing has heard the term Customer Acquisition Strategy… but what does it mean?

It’s fairly simple. A customer acquisition strategy describes the media, channels, and tools to gain new customers. In the traditional sense, a customer acquisition strategy is a list of channels and techniques of where and how customers will be acquired, and customer acquisition strategy is an essential part of your go-to-market strategy.

Before mapping out your customer acquisition plan, your team needs to have a clear view of the following:

1. Customer (WHO)


  • Who is your ideal customer?
  • What pains do your customers experience?
  • Can you describe a day in the life of your target customer?
  • How does your product fit into the customer’s daily activities and workflow?


  • Customer Persona / Customer Profile
  • Strategic messaging

2. Market (WHERE)


  • What markets do you want to pursue?
  • How big is your addressable market? Is it growing, stable, or declining?
  • Who are the biggest players in the market?


  • Market segmentation and analysis
  • Competitive positioning

3. Product Offering and Pricing (WHAT)


  • What product are you selling? What is your product’s unique value proposition?
  • How do you describe your product’s value?
  • How are you different from your competitors?
  • What is your product pricing strategy (based on usage, features, capacity, seats, etc.)?
  • How do you know which features to build next?


  • Product offering
  • Value proposition
  • Pricing strategy
  • Product vision/roadmap

4. Channels (HOW)


  • What are the most effective channels to reach your target customers?
  • What are the most popular publications that your target customers read?
  • What social media channels do your customers use the most?
  • What channels enable the optimal customer acquisition cost (CAC)?
  • How do your marketing channels correlate with product signup rates and won deals?


  • Demand generation strategy
  • Content and distribution strategy
  • Paid media strategy
  • Public Relations plan

We are not going to spend much time breaking down the go-to-market strategy. However, understanding who you are targeting, where, with what product and how will help you design an effective customer acquisition strategy. A customer acquisition strategy describes how all of these elements work together and what the first interaction between the prospect and product should look like.

An important aspect of designing a customer acquisition strategy is focusing on how prospects buy as opposed to how your company sells its product.

For that, you need to understand your customer’s lifecycle. There are four general stages of the customer lifecycle:

  1. Acquisition stage, where the buyer goal is to quickly assess pain-product fit and obvious benefits, and take action to evaluate product.
  2. Adoption stage, where the buyer goal is to learn how to use the product, experience initial value or benefit, evaluate, and make a buying decision.
  3. Retention stage, where the customer goal is continuously receiving value and benefit from the product.
  4. Expansion stage, where the customer goal is to explore how to be more empowered and successful with the product and new features and capabilities.

For the sake of this article, we’ll focus on specifically the Custom Acquisition strategy, which falls under the Acquisition and Adoption Stages.

Stages of Customer Acquisition

Customer acquisition happens in stages, which are often visualized as a customer acquisition funnel. The customer acquisition funnel visualizes the journey a potential customer takes.

Marketers and entrepreneurs often discuss the funnel in 3 main stages:

  • Top of the funnel (awareness): At this stage, your goal is to generate awareness and leads amongst your target audience. Typically, you’ll focus on a large, broad audience that may be interested in your company’s brand or products, but without a definite intent to buy. A baby brand may use the hashtag #nurserydesign to expose their posts and products to those looking to decorate their nursery on Instagram.
  • Middle of the funnel (consideration): Prospective customers that move from the top of the funnel to the middle have usually taken an action that shows that they are considering a purchase, such as signing up for an email list or following your brand on social media. It is now up to you to convince them to become customers.
  • Bottom of the funnel (purchase): This is the final stage a prospect goes through before they convert into a customer. Usually, they have taken some action that indicates a strong intent to buy, whether it’s adding a product to their cart or signing up for a free trial. Businesses will often send incentives, like a discount code, at this stage in order to convert prospects who are close to making the decision to buy.

There are many different ways a business can go about finding and converting these new customers, especially online. With digital marketing, it has become easier to track exactly how your business acquires new customers, discover and test new marketing tactics, and scale those that work.

How do you calculate customer acquisition cost (CAC)?

Almost every new customer comes with a cost that can be calculated based on the marketing effort put forth to acquire them. In order to know whether your customer acquisition efforts are working, you will need to understand how to calculate your customer acquisition cost (CAC).

Your customer acquisition cost is the cost of marketing divided by the number of new customers acquired.

For example, say your Instagram page brings in 50 customers a month and you spend $500 creating content. Your customer acquisition cost would be $10:

Marketing Spend ($500) / New Customers ($50) = CAC ($10 per customer)

The reason businesses calculate their customer acquisition cost is to understand if their marketing approach is profitable. Using the above example, if each customer is spending $50 on average on their first purchase from your business, and your gross margin on each order is 50%, your profit would be $15 on each order.

Average Order Value ($50) x Gross Margin (50%) – Customer Acquisition Cost ($10) = Profit ($15)

For brands with a higher customer lifetime value, it may even make business sense for their customer acquisition cost to not be profitable on the first purchase. If your customer data tells you that the customers you acquire will likely continue buying from your brand after their initial purchase, you may be able to afford to spend more to acquire each new customer.

By using Google Analytics, and other tracking/reporting tools, it’s possible to know your customer acquisition cost for each marketing initiative. Experimenting with different customer acquisition strategies, and attributing the results, is the key to unlocking new ways to grow your business.

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