What Is Customer Acquisition?

Jan 26, 2022

Your business needs a loyal customer base in order to grow. Learn more about turning prospective customers into new customers with this primer on customer acquisition.

Lauren SpillerSr Content Writer
What Is Customer Acquisition?

What we'll cover

Small-business owners, such as yourself, are looking to attract new customers and are overwhelmed with possibilities. Should you offer free samples of your products? Start a referral program? Learn how to use TikTok?

With so many options, it can be hard to understand what actually goes into a successful customer acquisition strategy. This article will discuss everything you need to know about customer acquisition: What it is, why it’s important, what it might cost, and what it looks like in action.

What is customer acquisition, and why is it important?

Customer acquisition is defined by Gartner as the process of identifying and developing opportunities in the sales channel and executing them to close the deal. Put simply, it refers to gaining new customers. 

Customer acquisition is important because your business needs customers if it’s going to succeed. This is also why you want to be thoughtful and strategic with any customer acquisition strategy you implement. 

Customer acquisition is often associated with the early stages of the customer journey (or the series of experiences a customer has with your brand). However, the customer acquisition process is multifaceted in itself, and involves everything from making a potential customer aware of your brand to the moment they hit the “buy” button.

How does a business achieve brand awareness? Forbes suggests that it takes a balance of paid marketing, such as Facebook ads, and organic marketing, such as referrals and customer reviews. Once prospective customers are aware of your brand, you can target them with content that entices them to make a purchase. This type of content is called acquisition marketing and can include customer stories, or perhaps a special promotion for new customers.

We’ll discuss customer acquisition methods in more detail later on, but the best choice for your business will depend on the type of product or service you’re offering, as well as your budget. 

What is customer acquisition cost, and how do I calculate it?

As the old saying goes, you have to spend money to make money. Gartner defines customer acquisition cost (CAC) as the average sales and marketing expenditure necessary to achieve a first sale with customers (full content available to Gartner clients). 

It can be difficult to calculate your CAC in the early stages of your business because you won’t yet have the necessary customer data, but it’s easy to estimate. Say you spend $100 on Facebook ads in your first month and gain 10 customers. Your customer acquisition cost from those Facebook ads would be $10. Here's a quick video we created to sum up the process:

Of course, you’ll want to account for all of your customer acquisition channels in calculating your total CAC as your business grows. But it can be helpful to calculate the separate customer acquisition cost for each marketing channel you use so that you know which ones are most cost-effective for your business. 

Tips for keeping your CAC low as you scale your business

Here are some ways to keep your marketing spend low as your business grows:

  • Focus on the marketing tools that will help you reach your specific business goals. For reference, social media marketing tools were ranked as most effective for achieving marketing goals in our 2021 Marketing Technology Survey*. Other highly ranked marketing tools include customer relationship management (CRM) and email marketing.

  • Create a marketing technology budget that can accommodate your business’s growth. More than half (51%) of the small-business leaders we surveyed said they spend somewhere between 21% and 35% of their overall marketing budget on marketing technology.

  • Use free marketing tools if possible, such as free email marketing software. Keep in mind that these platforms usually have limits (such as a cap on how many emails you can send per month). That said, they’re a great way to try out different vendors to find the best fit for your business as it grows.

What does an effective customer acquisition strategy look like? 

An effective customer acquisition strategy grabs the attention of prospective customers, boosts engagement, and aims for a low customer acquisition cost. Here are some examples:

Content marketing

Gartner defines content marketing as the process and practice of creating, curating and cultivating text, images, graphics and other content assets that are distributed through paid, owned, and earned media. These assets are used to tell stories that help brands build and nurture relationships with existing and prospective customers to drive awareness, generate demand, influence preference, and build loyalty. 

Examples of content marketing include blog posts, podcasts, videos, and webinars produced with the intention of introducing your business to new customers. 

Social media marketing

Social media marketing refers to the use of social media platforms to connect with audiences, build the company's brand, increase sales, and drive website traffic. It involves engaging with followers, analyzing performance, and running social media advertisements.

The table below lists popular social media platforms and ways your business can use them for both customer acquisition and customer retention (full content available to Gartner clients):

PlatformHow to use
FacebookCreate brand awareness and an engaging community of customers by kicking off discussions and sharing thought-provoking content.
InstagramBuild brand equity through powerful and authentic visuals such as images and short-form videos, which reflect your business’s opinion and vision.
LinkedInShare ideas through your own and your employees’ business network.
PinterestShare creative and inspiring content related to your products.
SpotifyCreate one (or multiple) podcast series with a focus on specific topics to share your opinions, drive engagement, and increase brand awareness.
TikTokWork with younger demographics to increase brand awareness by letting them work with your brand.
TwitterShare opinions and participate actively in discussions to build engagement.
YouTubeCreate video content to increase brand awareness through product presentations, recorded demonstrations, webcasts, thought leadership, opinions, and education.

Social media marketing tools can also be low-cost or even free, unless you sign up for an upgraded account, such as YouTube Premium, or choose to boost your content through ads. As your business grows, you can adopt social media marketing software to help you engage existing customers as well as potential customers, schedule posts, and gain insights, to name just a few features.

Email marketing

Email marketing is the use of email to deliver and optimize marketing messages (such as contextually relevant, real-time, personalized communications), in support of multichannel engagement across the customer journey. 

As we mentioned earlier, email marketing is a great low-cost or even free acquisition method, and the only information you need from a potential customer is their email address. It’s a great way to keep them engaged via brand newsletters or promotions. 

Contests and giveaways

Holding a contest or a giveaway can be a fun way to introduce new customers to your products or services. You can use social media or email to explain the terms of the contest or giveaway, and you can collect customer information via contest platforms, such as ShortStack or Wishpond.

shortstack example

Screenshot of example created with ShortStack’s Instant Win template, taken by author

What’s next?

An effective customer acquisition strategy grabs the attention of prospective customers, boosts engagement, and aims for a low CAC. But you also want to make sure that whatever strategy you choose is tailored to your service or product as well as your budget. This way, the time and money you put behind your customer acquisition marketing gives you your best return on investment (ROI). 

If you own a restaurant, social media marketing is a great way for you to start building a following before you consider paid ads. If you’re a hairstylist, you can start by building up customer reviews, or providing an existing customer with an incentive to refer their friends to you.

There is no one-size-fits-all customer acquisition strategy. But with the examples we’ve discussed, you can feel confident selecting one that works best for your small business.

Survey methodology

*GetApp 2021 Marketing Technology Survey

GetApp’s 2021 Marketing Technology Survey was conducted February 18-25, 2021 among 344 small business leaders to learn more about the use of marketing technology by startups and small businesses. Respondents were screened for leadership positions at companies in healthcare, IT services, marketing/CRM, retail/eCommerce, software/web development, or AI/ML. 

Disclaimer: Results of this study do not represent global findings or the market as a whole but reflect sentiment of the respondents and companies surveyed.

Note: The applications mentioned in this article are examples to show a feature in context and are not intended as endorsements or recommendations. They have been obtained from sources believed to be reliable at the time of publication.

About the author

Lauren Spiller

Sr Content Writer
Lauren Spiller is a Sr Content Writer at GetApp covering customer service and customer experience with a focus on customer acquisition through SEO. She has an MA in Rhetoric and Composition from Texas State University and has presented her work at the European Writing Centers Association, Canadian Writing Centres Association, and the International Writing Centers Association conferences.

She is currently developing content for a workshop series on SEO writing.
Visit author's page