Effective Customer Acquisition Strategy for Startups in 2020
by Mike Khorev
Your startup simply won’t grow if you can’t generate new customers, period.
So, without a proper customer acquisition strategy for your startup, you are going to run into various problems along the way, and it’s going to be very difficult if not downright impossible to grow your business both B2B and B2C.
On the other hand, figuring out which channel is the most effective and sustainable to use in generating new customers is often the biggest challenge for any business.
In this guide, we will discuss all you need to know about how to plan and execute a working startup customer acquisition strategy in 2020. By the end of this guide, you’ll be able to recognize the most effective channels you can use to acquire new customers sustainable and how to properly execute your campaigns.
Let us begin by discussing the basic concept of customer acquisition for startups so we can be on the same page for the rest of this guide.
What Is Customer Acquisition
Customer acquisition, in a layman’s term, is any effort and process of bringing in new clients or customers to your business. We say we have “acquired” a new customer when we have successfully persuaded a consumer to purchase a product and/or service.
So, a customer acquisition strategy is a systematic, sustainable process of acquiring new customers on a long-term basis, and this customer acquisition strategy should be able to evolve and adapt to new market trends and evolving customer behaviors.
Different startups with different revenue models might have different customer acquisition strategies. However, all effective acquisition strategies should begin by identifying quality prospects (potential customers).
Typically, all consumers must go through a customer journey or buyer’s journey before they finally purchased a product or service, which can be divided into three main stages:
- Awareness stage: they figured out a new business or brand, and gain awareness about this brand and its product and/or service
- Consideration stage: the prospect considers purchasing the product/service from this brand. They might compare it with other similar products and services during this stage, check reviews, and ask for recommendations from their peers.
- Decision stage: the prospect choose to purchase a product and converts from a prospect into a customer
There are typically more people in the awareness stage compared to those in the consideration stage, and only a select few of those in the consideration stage will enter the decision stage. So, if we visualize these stages, we can see a funnel-shaped chart similar to the image below.
Customer acquisition for startups typically refers to this funnel as a whole, but mainly the first two stages (awareness and consideration), which are often also referred to as the top (lead generation) and the middle (lead acquisition) of the funnel.
The bottom of the funnel—the decision stage— or lead conversion phase, is technically still a part of the customer acquisition but may be considered a separate initiative called conversion-rate optimization or CRO, especially for eCommerce startups.
Preliminary Step: Define Your Target Audience
As we have established above, all customer acquisition strategies for any startup should begin by identifying your target audience.
An important principle to understand is that your product or service won’t please and attract everyone. There are very, very few products that meet a universal need.
Instead, your product will be a solution for only a certain group(s) of people, your ideal audience. Discovering who your target audience is is the essential preliminary step of your customer acquisition strategy, so you can tailor your strategy and focus your efforts primarily on this target audience.
If you haven’t defined your target audience, you are essentially adding unnecessary handicaps to your customer acquisition efforts, and so they won’t be effective.
So, conduct your market research and develop your buyer persona. Find as much information as you can about who you should market your product/service to and how to attract this audience effectively.
This insight will be the strongest foundation of your whole customer acquisition strategy.
Customer Acquisition Strategies
What is the most effective customer acquisition strategy for startups? There is no one-size-fits-all answer to this question, as the best strategy for your startup will depend on various factors from your available resources, overall business objectives, and ultimately, your target audience.
Nowadays, however, there are only four main tactics or methods of acquiring customers: content marketing, search engine marketing, social media marketing, and email marketing. We will discuss them one by one:
1. Content Marketing
In 2020, we can now safely say that content marketing is marketing itself, and in regards to startup customer acquisition, it is an effective method for virtually all kinds of startup.
The main idea in content marketing for startups is to consistently publish high-quality and relevant content to attract the target audience’s attention and drive them to your website. So, content marketing is especially effective in the awareness and consideration stage: the audience stumbles upon your content when they are looking for information and learn about your product or service (awareness), and they might consume more content when they consider between your product and your competitors’ (consideration).
Content marketing is the preferred marketing strategy today (in a concept we know as inbound marketing) because of one main reason: people are getting increasingly resistant to traditional advertisement and promotion. Traditional ads disrupt our initial activity. For example, we are browsing a website and then there’s a pop-up banner. Obviously, the ad is disruptive (and annoying).
Content, however, is not disruptive since the audience is the one proactively looking for information. In fact, if the content is relevant and helpful, they will perceive the brand (your brand) as trustworthy and helpful, so you are eliminating barriers rather than building walls.
Content marketing can come in several different mediums, such as:
The most common form and arguably still the most effective, you can implement blogging as an effective customer acquisition strategy for all kinds of startup, industries, and audience types.
Blogging has two main benefits over other forms: it’s accessible (both for the audience and the publisher), and it’s versatile. You can easily explore different topics and content approach in your blog with minimum risks. On the other hand, if you’ve found any specific niche, you can be consistent and leverage it to build your credibility as an expert/thought leader in the niche.
Also, building a blog—even from scratch—-is very affordable. Your biggest cost here will typically be your investments in content creators/writers.
In-Depth text-based content
This can include forms like white papers, ebooks, research reports, guides, and others. Typically these types of content are delivered as “gated” content. That is, the prospect typically needs to provide their contact information before they can access or download the content.
So, these in-depth content forms are often very important in capturing leads. We won’t be able to acquire customers before we first capture them as leads or prospects, so this is a very important customer acquisition method.
The idea behind this method is to convince the audience that you are offering something valuable for free so the audience is willing to provide their contact information.A common tactic is to attract readers with a blog post, then offer a more in-depth ebook covering the same topic as the post. This way, if a reader feels that your blog post is relevant and valuable, then they might be interested in consuming the gated content (and exchange their contact information).
As we can see, these in-depth content forms have a different purpose than traditional blog posts, and obviously the production process is also different. We’d need more time and commitment to create this in-depth content, and they might also need a unique and specific promotional plan.
This method, called the lead magnet, is a very crucial lead generation device.
Videos and podcasts
We can’t deny the fact that more and more people are consuming video content as their main way to consume information. 85% of all U.S. internet users watched online videos in 2018, and nowadays it’s probably close to 100%. Also, podcasts are also rising as a medium since mid-2019.
Obviously, videos and podcasts are more complicated to produce than text-based content, but nowadays quality cameras, microphones, and other video and audio production equipment are now much more affordable and accessible. Also, there are now a lot of freelancers and affordable agencies, so producing videos and podcasts are actually easier than you think.
Remember that the content itself is always more important than the overall production quality of your videos and podcasts (but that’s not saying the quality is not important). Since videos are usually the most expensive to produce, it’s best to preserve your best content for videos first. If, for example, you are only going to visualize a blog post, you can use various animation software and even Slideshare to reduce production costs.
The principle of using videos and podcasts in customer acquisition is similar to text-based content: provide value to attract users, introduce them to your brand/product/service, and drive them to your website to capture them as leads.
2. Search Engine Marketing
It’s important to note that when we refer to “search marketing”, it doesn’t necessarily mean SEO.
Instead, there are two different sides to search engine marketing: organic (or free) search engine marketing, which is search engine optimization (SEO), and paid search marketing, which is PPC ads.
The case of PPC ads vs SEO is just like any case of paid vs organic efforts: it’s about time vs cost.
Organic efforts are (at least it should be) free, but it’s going to take a significant amount of time before you can get any significant result. In the case of SEO, it typically takes at least 6 to 12 months before we can get on the first page of Google’s SERP and gain a significant amount of traffic.
On the other hand, paid efforts like PPC ads will guarantee results, provided you have the budget. But, they can be extremely expensive if you are not careful.
Nevertheless, both sides of search marketing is a very important customer acquisition channel due to several reasons:
- There are over 3.5 billion searches on Google every day, and the number is still growing by roughly 10% every year
- 89% of B2B professionals use Google to find solutions and services that can help their business
- 95% of internet users will not go to the second page of Google, so investing in SEO is very important
- Traffic from organic search converts 566% better than traffic coming from PPC ads, so you can’t rely on PPC ads alone
SEO for startups is currently one of the most popular customer acquisition methods due to several reasons. First, it is relatively accessible and easy to implement (even if you are going to do it yourself), and it is cost-effective with relatively low initial investments and high ROI. However, as we have established, implementing SEO can take time, and this is where PPC ads can help.
Search marketing works in combination with content marketing (as discussed above). You won’t rank on Google unless you have relevant, quality content, while your content won’t get any traffic if you don’t have enough search presence.
3. Social Media Marketing
Similar to search engine marketing, social media marketing can be divided into two: paid and organic, and the same case also applies: time VS cost.
Organic social media marketing is about growing your own followers on social media and posting your content regularly. This is obviously cost-effective and when done right we can do it for absolutely free. However, growing followers on social media can take years before we get a significant amount (say, above 10,000), and obviously it’s not always successful even after we’ve regularly published high-quality content.
Paid social media, on the other hand, is about using paid advertising and other paid promotional channels provided by the respective social media networks. For example, on Facebook and Instagram, we can invest in various Facebook Ads.
Again, while investing on these paid options can guarantee short-term and even instant results, they can be very expensive to invest in. The current average CPC (Cost Per Click) for Facebook ads is $0.97 or if you prefer CPM, it’s around $7 per 1000 impressions. As you can see, the cost is pretty high.
So, as with search marketing, finding the right balance is very important here.
Organic social media efforts are especially important in building awareness and to develop an online personality. This is a great opportunity to establish your position as the thought leader and expert of your industry, especially when it’s paired with effective content marketing–as discussed above.
You can also use social media to share content you’ve published on other platforms. So, we can think of social media as an amplification of your other acquisition tactics.
There are several reasons, however, to why social media is now increasingly more important as a customer acquisition strategy:
- Reach: a viral social media post can reach a lot of people in a very short amount of time, making. Virality factor is a very important advantage of social media as a customer acquisition channel, as you
- Targeting: another great advantage of using social media in generating leads and acquiring customers is the transparency of the platforms. We can easily know the demographics of a social media account (if it’s not anonymous) and decide whether it’s a good fit for your company.
- Two-way: you can use social media channels to gather feedback from your customers, and at the same time can provide suggestions and promote your brand.
- Big data: social media actively generates massive customer data with the sheer number of posts, videos, pictures, mentions, and so on. You can collect, analyze, and leverage this data to custom-tailor your customer acquisition strategy.
In general, there are several ways we can use social media to generate leads and acquire customers:
- Drive your social media audience a lead-capture landing page or your website. It’s relatively hard to capture contact information straight from social media posts, so it’s more efficient to drive them to a web page instead.
- You can include links for opt-in forms on social media posts, so people can sign-up for your newsletters.
- Include CTAs in your social media posts as natural as possible, but don’t be afraid to use it.
The secret to useful utilization of social media as a customer acquisition channel is to develop a strategic plan to tackle three core issues:
- Choosing the right network(s) you are going to focus on, and which ones to avoid depending on your customer profile
- Developing the brand voice on your social media, and establish a person/team responsible in delivering this brand voice and managing content
- Developing a crisis plan to tackle issues like backlashes and negative feedbacks
For example, if you are a B2C startup, then nowadays you should mainly focus on Instagram and Facebook, probably YouTube. On the other hand, if you are a B2B startup, you should focus on LinkedIn.
4. Email Marketing
Even with all these newer platforms and communication technologies, email marketing is still the top-performing digital marketing channel with the highest ROI of up to 4,000%.
The main role of email marketing, especially in relations to the three channels discussed above, is that the three channels will involve building an email list. Leveraging on this email list to nurture prospects and convert them into customers is the key to a successful email marketing strategy.
Although this might seem like an obsolete acquisition method, the truth is that is is still a very effective way to stay engaged with your customers by promoting content through your newsletter, informing them of the launch of a new product, discounts, events, and so on.
The secrets to modern email marketing as a customer acquisition method are personalization and automation.
We can use the above channels to gather more customer data, and leverage on the data to create personalized email messages: sending the right message to the right people at exactly the right time.
Startup Customer Acquisition Strategy Best Practices
An effective customer acquisition strategy must follow three important principles:
- Highly Targeted
It’s obvious that not all consumers are the right fit for your startup. Customer acquisition can be a lengthy and expensive process, so we’d need to make sure that our resources and time are focused on the right people.
The secret to a targeted customer acquisition strategy is to do your market research, and there’s no shortcut around it. Figure out your target audience, and assess your available resource to develop a tailored strategy focused on your ideal customers.
We can’t rely on one channel and strategy alone to sustainably generate leads and acquire customers. You’d have a better chance of reaching new customers with more channels, and at the same time, can mitigate your risks on a channel/platform.
The world is rapidly changing all the time and so does purchase behaviors. Consumer are now increasingly resistant to promotions, and more than 80% of consumers trust social proofs and advice from friends over brand claims. Gone are the days when we can have one sustainable acquisition method and rely on it. Now, we have to always be on the lookout for new opportunities, adapt, and be flexible
Customer acquisition is not only about getting more customers, but also about acquiring the most valuable customers that can stick around with your business, and ultimately can act as an advocate to convert even more people.
Every effective customer acquisition strategy must start with defining your target customers, and only then can we create a highly targeted, adaptable, and diversified strategy to effectively convert these target customers.
Consistency is always key, so it’s always important to monitor your customer acquisition methods, evaluate, and adjust your tactics whenever required.
April 6, 2020