Common customer acquisition challenges and how to overcome them

Marketers have many tools, tactics and strategies to help grow their business. But in the first instance, they need to decide where to invest their resources. This could include growing market share, increasing customer share of wallet or improving churn rates. But for many companies, acquisition tops the priority list.

Customer Acquisition

Written by Sonia Danner, Marketreach

Panel photo of a weightlifting boy

Without new customers a company will eventually grind to a halt. Businesses cannot survive or thrive by only focusing on their existing customers. Acquisition – or more precisely finding prospects and then converting them into purchasers - is crucial.

At the beginning of 2019 a Worldwide Business Research (WBR) survey of digital marketers found 80% were under more pressure to meet acquisition and revenue targets than the previous year.

Similarly, A HubSpot State of Inbound 2018 global report quizzed 6,200 marketers and found 69% prioritised converting contacts and leads into customers as top of their list for the next 12 months.

5 key challenges to successful customer acquisition

Marketers face several hurdles in creating a successful acquisition campaign.

The digital explosion means there’s access to more channels to reach and interact with customers than ever before. Having more choice is great, but on the flip side there is also more risk of annoying potential customers.

1. Capturing consumers’ attention

This is difficult in a crowded market where consumers are being bombarded with messages 24/7. A rough estimate suggests consumers are exposed to around 5,000 ads a day, so how can a brand achieve cut-through and achieve differentiation with its message in this landscape?

The WBR study says differentiation is the greatest B2C customer acquisition challenge, ahead of privacy concerns or the increasing cost of acquisition.

2. Creating a great first impression with customers

Encouraging someone to try your product or service for the first time relies on creating a positive perception of your offering

Marketing is key to achieving this. Messages need to be relevant and engaging to get potential customers to consider buying from you.

3. Advertising message bombardment

Ad bombardment is partly blamed for undermining public trust in advertising and being a catalyst for ad blocking and ad avoidance.

Public trust in advertising has halved from 50% favourable in the early 1990s to 25% in 2018, according to ad industry thinktank Credos.

Managing Director of Marketing and Digital at Direct Line, Marc Evans recently wrote:

“There's a fine line between repeating a message to a consumer to ensure that it has landed with them and doing it to the point that it is downright annoying... This is portrayed vividly in the case of online retargeting where consumers notice that they are being 'followed around the internet' by an item that they have already bought.”

“The issue is not restricted to digital media channels. Any media channel will produce a normal distribution of opportunities to see or hear, and with traditional media increasingly moving towards programmatic retargeted buying, the issue is only likely to get worse.”

So, it’s evident that building a positive experience and trust with your audience should be front of mind when planning an acquisition campaign.

4. GDPR and customer acquisition

The General Data Protection Regulation (GDPR) has resulted in depleted customer databases. And many businesses are uncertain about how to use individual's personal data.

This regulation is a set of rules which govern the way organisations protect individuals and the data that they hold on them. For marketers, GDPR includes rules about the way you can use personal data to communicate with customers.

One-to-one communications are a very powerful part of the marketing mix. Of all the direct channels, mail is proven to be one of the most successful in building relationships. And it's not affected by the privacy rules that apply to electronic media. In many circumstances it will be the most effective way to communicate and build trust amongst customers.

5. The rising cost of customer acquisition

Everything comes at a price, including new customers. Cost per acquisition (CPA) has been rising steadily on certain digital channels and platforms, as competition heats up and audiences become less receptive to messaging.

Mary Meeker, founder of Bond Capital, delivers an Internet Trends Report each year that receives widespread media attention. Her 2019 report states that the average CPA on digital channels is rising at an unsustainable level.

At the same time marketer budgets are under pressure in a tough economic climate.

How to calculate Cost Per Acquisition (CPA)

Knowing your CPA is fundamental to being able to evaluate your marketing campaign. To find the CPA figure you need to divide the total cost of acquiring customers by the total number of prospects converted. 

What to include in CPA?

Usually the CPA is applied to the budget for specific channels e.g. the CPA for a search marketing campaign. But for a marketer and Finance Director to have a full overview of an integrated campaign, all the acquisition-related expenses must be taken into account. For example including, sales and marketing team salaries.

Other measures to consider in calculating cost per acquisition

The CPA shouldn’t be the only metric for customer acquisition – it can be dangerous to focus too much on driving down acquisition costs without considering other measures. Focusing on efficiency can harm effectiveness, the customer experience and customer sentiment.

Perhaps just as important a measure is Lifetime Value (LTV) – how much revenue will an acquired customer deliver over a set period? This calculation should also be considered in any return on investment modelling.

Why omni-channel marketing campaigns are crucial to customer acquisition

Marketers and agency planners have a plethora of channels and platforms at their disposal. The challenge is finding the appropriate channel mix and weighting to reach the right audience with the right message.

Potential customers have many possible touchpoints across the buying journey and marketers need to choose an effective mix of channels.

Nearly half of consumers – 48% – typically switch between digital and physical interactions with companies, even within a single interaction.

A campaign that drives both direct response and longer-term awareness is going to deliver the most meaningful results. A multi-media mix is proven to deliver both reach and reinforcement of a message, rather than a focus on a single channel.

Mail has a role to play in a multi-media campaign as it's a trusted medium, delivering a positive experience that can prompt actions.

The challenges of customer acquisition attribution

The impact of your acquisition campaign needs to be measured accurately to assess the value of your investment. You will need an attribution model that takes account of the several touchpoints in the customer journey.

  • Old models of attribution either focus on the first touch channel or last touch channel and attribute customer acquisition to either of these interactions.
  • First touch attribution is essentially the media channel where the product or service was first discovered. These channels will take the credit for any sales.
  • Last touch attribution focuses on the final touchpoint or media channel before sales conversion. Focusing on this can skew marketers to concentrate on high-conversion channels at the expense of prioritising finding new audiences and likely prospects. Relying on a last-touch metric won't reflect the complexities involved in the customer’s decision-making process, nor how channels work to amplify and reinforce each other.
  • Multi-touch attribution provides a more rounded picture of the success of an omnichannel campaign. It does require a more complex model and this can be a challenge – 54% of a poll of senior marketers say modelling multi-touch is one of the biggest gaps in their campaign effectiveness research.

Mail’s role in the mix can now be measured via JICMAIL. This is a tool that can measure how consumers use mail across different sectors, and the actions they take as a result of receiving it. JICMAIL can be a useful planning tool to help businesses to plan effective mail campaigns.

Why mail can enhance your customer acquisition strategy

Acquisition planning has tended to focus on digital channels because of the perceived lower CPA and the mass reach.

However, as potential customers become less responsive to mass marketing programmes and offline channels maintain their ability to engage and delight, more thought is needed about media models. Mail can make a strong contribution to multi-media programme.

  • Nearly 80% of customers use at least one ‘traditional’ channel to find out about new products and services – the same number as those who use at least one digital channel.
  • Mail, due its very physicality, offers the chance to create messages that have stand-out, recall and generate a positive experience for recipients: 70% of people say mail makes them feel more valued compared to 30% for email.
  • The channel now offers the ability to respond to consumers' signals of intent at speed to amplify and reinforce digital messages, thanks to Programmatic Mail.
  • Neuroscience research shows that when primed by mail, people spent 30% longer looking at social ads – mail sent out before the social media advertising element of a campaign boosts dwell-time.

How to use mail to as part of your customer acquisition strategy

Mail has the key attributes for acquisition: it drives cut through, it’s trusted and it’s a way to gain new customers within the boundaries of GDPR.
There are three types of mail each offering a different capability to consider as part of an acquisition campaign.

 1. Partially Addressed Mail 
The highly targeted and responsible way for businesses to acquire potential customers without requiring their personal data.

  • It targets small groups of around 15 carefully selected households in a postcode rather than an individual.  
  • Partially Addressed Mail allows you to either top up in areas where you have existing customers, or find new postcode areas with similar profiles to your existing customers using geo-demographic targeting.  
  • Using relevant titles such as ‘Pet Lover’ or ‘Kitchen Wiz’ to address households grabs attention and engagement.  
  • 88% of Partially Address Mail is opened, read, filed or set aside for later (JICMAIL Q2 2018 – Q1 2019).

 2. Direct Mail 

This is addressed mail, personalised to an individual.

  • The very fact it bears the recipient’s name starts building a strong one-to-one relationship and it allows for tailored offers and promotions. 
  • The personal aspect is one of the reasons why direct mail has a 94% engagement rate. 
  • It also generates impressive sales results. 
  • 31% of direct mail can drive commercial actions like going online and buying (JICMAIL Q1 2017 – Q2 2019). 

3. Door Drops 
The cost-effective way to reach new customers locally and nationally without using personal data.  

  • You can reach your choice of almost 30 million households. 
  • With the cut-through ability of all mail, door drops are a strong start to an acquisition campaign and can generate leads that can be further qualified.  
  • Door Drops are measurable, marketers can evaluate its impact. 
  • Research shows that 90% of campaigns which included door drops enjoyed an increase in new customers, compared with 59% of those without.

Acquisition begins with identifying your target customer and investing time in understanding their wants, needs and preferences. 

It’s a good idea to create personas to help identify which media channels and what kind of message will best catch the attention of your prospects. It may be a discount, a free trial without asking for more data, or access to ‘exclusive’ products – you’ll have to research and trial to see what offer resonates most.

Chasing the wrong audience with the wrong media strategy will waste time, effort and budget.

Combining the right media mix with an experience that adds value to the potential customer should lead to a much higher conversion rate.

And, a happy customer will be keen to tell their friends and associates of their experience and further promote your business.

To enhance your customer acquisition strategy download your free '3 Proven Ways to Boost your Customer Acquisition' guide.

Further reading:

Royal Mail, MarketReach, 3 Proven Ways to Boost your Customer Acquisition

Royal Mail, MarketReach, Measuring Mail's Effectiveness with Neuroscience

Royal Mail, MarketReach, The Value of Mail in Uncertain Times Report

Royal Mail, MarketReach, Programmatic Mail guide

SheerID,New Report Benchmarks 150 Digital Marketers Customer Acquisition Strategy for 2019

Hubspot, State of inbound 2018

LinkedIn Pulse, We now see 5,000 ads a day ... and it's getting worse

Advertising Association, Report: Arresting the decline of public trust in UK advertising

WARC, The risks of over-exposure: how ad bombardment promotes consumer mistrust

What's a good cost of customer acquisition

IPA, Q2 2019 Bellwether Report

Impact, 5 key takeaways from Mary Meeker's 2019 Internet Trends report

IPA, 3 key ways to drive campaign effectiveness

MarketingWeek, Innovations in direct mail help brands shout louder in the digital era

eMarketer Why marketers see gaps in their attribution

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