Never in our dealings with small to medium-sized businesses have we run into an owner who has no interest in growth or expansion. It’s safe to say you are no different. Many entrepreneurs have a vested interest in scaling up or expanding – but it’s not a matter of want, it’s a matter of how?
There are a couple of ways to expand customer acquisition. You could double your marketing budget, but this isn’t a viable option for most. You could cut your price in half and hope for more customers to come running in your door, but that race to the bottom isn’t the smartest choice either.
In order to intelligently scale customer acquisition, you need to have a decent understanding of how to calculate your customer acquisition cost (CAC). You should also understand the sales funnel that ultimately converts them into a paying customer. Once you’ve mastered how to calculate and optimize your customer acquisition cost (CAC) you’re ready to pursue more customers.
Are customers finding you by accident or as a result of marketing?
Sometimes a company gets lucky and customers happily fall into their lap. For the rest, it’s very important to know how your customers find you, and why they are staying (or going).
Scaling customer acquisition starts with knowing what’s working, and what isn’t.
Let’s say for example you got 100 new customers last year. That’s great! Right?
In the same example let’s say your marketing efforts got the attention of 10,000 people.
Does a 1% close rate get you as excited now?
If you can’t identify what went wrong with the other 9,900 customers that didn’t convert, then increasing your marketing budget would be a waste. Here are a few things that could have gone wrong in your sales funnel:
- They saw the ad, but it wasn’t relevant to them
- They want what you have, but they aren’t ready to buy
- They had trouble finding out how to buy (Don’t laugh, it happens all the time)
- They weren’t qualified to buy
If you understand where the customers left your sales funnel, you can remedy and plug the holes in your sales funnel. Mathematically, if you are able to convert more customers with the same budget, your CAC will lower. One of the beautiful things about the advent of digital marketing is the unprecedented amount of data available. This marketing data provides a look into exactly where a customer dropped out of your funnel so you can make smart decisions to strengthen your sales funnel.
Keys to Scaling your customer acquisition
We won’t go into too much detail about all the different things that account for a customer losing interest, but you must optimize your CAC if you are going to scale. If you can spend less to acquire a customer than the customer is spending with you over the lifetime of their relationship then your business will be profitable and scalable.
The number one focus, if you want to scale, is to make sure that when you acquire a customer, they have a superb experience. This will ultimately lead to longer retention and unlock the door to the most powerful form of marketing; word of mouth. A referral from a client doesn’t cost you any additional marketing dollars, and it is the most effective in getting a prospect to act and convert.
You are on the path to great things.
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