December 4, 2021

Customer Acquisition Funnel: What’s It & How To Make It Work For You

A customer acquisition funnel is a simple model where you can visualize the steps that lead to conversions. It is the process of motivating an audience to become a customer; it’s what marketing is all about.

Contents

When marketers talk about "funnels", we are referring to how those interested prospects behave as they move from being totally unaware of what you offer, to becoming aware enough to consider purchasing from you, all the way up until converting into a buyer/customer who actually spends money on your products and services.

In some cases, companies use different terms to describe each step in their process. Sometimes they call them awareness, consideration and conversion. Other times it's signup, activation and retention. 


What Is the Customer Acquisition Funnel?

The customer acquisition funnel is a strategic tool designed to guide marketers toward more effective performance. It begins with high-level goals, moves on to specific strategies for how you're going to achieve those goals, and then details tactics that can be used for your overall strategy.

The complete guide covers all aspects of the customer acquisition process from start to finish and includes critical checkpoints at different stages of awareness, consideration and purchase.  

It also has detailed worksheets so you can customize them for your own business needs.  At its most basic level, the sales funnel represents a progression of steps that prospects go through as they become aware of and then engage with your product or service. That's called the customer acquisition process.

Customer Acquisition Process:  The simple idea behind this is that all businesses win when more potential customers become paying customers. The not-so-simple reality is that many companies struggle to turn even a small percentage of their website visitors into actual revenue.

At this stage, your prospect becomes aware of your company name or website URL. They see a Facebook ad for example and click on it to learn more about you. Or maybe they're just surfing around looking at websites and happen upon yours while reading an article.

That could be enough to get them thinking about your brand or service or filling out a form that gives you their contact information so you can continue communicating with them through email marketing campaigns. 

At the very least, this might trigger an organic search result directing them to your site where they can get more information about you and your offerings.

Sales Funnel:  The awareness stage is sometimes referred to as the top of the funnel and it's considered your brand or company's first impression with the prospect so do whatever you can to make a good one.

Make sure your website is easy to navigate, has updated information, looks professional, and includes an accurate description of what your business actually does. Once people are aware of you they will move on through different stages until they eventually purchase something from you. 

At this point in the sales process, prospects have become aware that there might be some reason for them to engage with your company or product, or service in some way.

They may have started surfing around your website, read enough about you on social media to trigger their curiosity or they have received some kind of email marketing message that got them thinking about you. Now they need more information before making a decision.  

Some will never go any further than this step, but if they're interested enough in what you offer, they'll start following you on social media and reading your blog posts. They might even sign up for your email list so they can get regular updates.

And then there are those who do more research by visiting other websites that have content about brands similar to yours or maybe even conducting an online search that brings up your website as one of the top results. As prospects learn more about what you do and how it helps them solve a specific problem, it increases their level of interest in your product or service.


The Importance of a Customer Acquisition Funnel and Strategy   

Once prospects move through the interest stage, it's important to be able to track this activity in order to better understand where you're losing them and what they're looking for at this stage of the process. This way you'll know if there are any holes in your content or product offerings that need to be addressed before you can expect more people to arrive in the consideration stage.

It's also important to remember that not everyone who becomes aware of your company will be interested.

Once you reach the top of the funnel, it's time to reevaluate your entire business model. If no one is sticking around long enough to move through this process or if there are so few people reaching each stage, it might be an indication that you need to review your marketing strategy and see what changes can be made so more people are seeing/hearing about what you offer.


Integrating your business goals and strategy  

When it comes to implementing your customer acquisition strategy, one of the biggest mistakes you could make is doing so without first integrating it with your overall business goals.

You need to be able to see how every aspect of your company works together as a cohesive unit. This way if changes are needed, they can be made quickly and effectively rather than trying to change everything at once which would only lead to more time wasted. 

For example, if you want to focus on acquiring new customers through social media marketing but don't have an email program already in place, do what you can with what you have for now while starting something else that compliments your current efforts.

If during this process, it turns out that there are too many things going on at once, it'll be impossible to determine which is working best or even what needs to be changed.

One of the most important things you can do to ensure success is communicate with your key players, including staff members who are responsible for implementing changes. Make sure they understand the strategy and are involved in the process so there are no surprises when it comes time to make any decisions about changing direction. 

A good way to make sure everything remains on track is by creating an internal scorecard for measuring progress towards company goals as well as customer acquisition strategies such as this one. This helps everyone stay focused and reminds them why certain projects were started in the first place.

When all departments can see how their contributions impact sales and other business objectives, they'll work together more effectively to deliver increased value.

Integrating your business goals and strategy into a customer acquisition strategy can also help you discover if there are any holes in your marketing efforts that need to be filled. If one channel isn't performing as well as it should, you might decide to try something else or shift the focus of your efforts. 

For example, let's say you notice that most of your new customers come from Google AdWords; this could mean that you're not doing enough to attract people using other search engines like Bing or Yahoo! This would be an excellent time to start investing more time and resources on these platforms so they'll bring more traffic over time which will eventually result in more sales.

Determining the best sales acquisition funnel for your company 

Understanding where your customers come from is one of the most important things you can do for your business. It will help you determine which customer acquisition strategies are bringing in the biggest return on investment (ROI) and showing the most promise so more resources can be allocated to them, whether it's creating a new landing page or building a stronger relationship with current partners.

The customer acquisitions funnel should include all channels being used when acquiring leads so every department is working together towards a common goal. 

You might have realized that selling products directly to consumers through websites won't always result in the best conversion rates. However, since this strategy lowers costs associated with customer acquisition, it may still be a viable option for increasing profits.

If not, look into other methods such as partnering with a site that already has a large audience or is in an industry related to yours. This strategy would increase your exposure and possibly lead to more sales from people who might not have been aware of you otherwise.

One of the most important things you can do when outlining your customer acquisition strategies is determining where best to spend money for the quickest return on investment (ROI). You can easily waste a lot of time and money investing in channels that don't produce results which will eventually affect your ability to continue operating. 

On the other hand, if you're able to demonstrate positive outcomes from certain activities, this could encourage investors or lenders who may be interested in contributing capital for future projects. Establishing a solid understanding of how each one of your channels performs can also help you decide how much money to invest in each one.



Making the customer acquisition strategy work for you 

You can't just outline a strategy and then cross your fingers, hoping it will eventually bring results. Your team should be ready to put their best foot forward at all times so you'll see progress towards your goals as quickly as possible. This means everyone needs to recognize what's expected of them which could be summarized by creating an "ideal employee profile". 

Make sure every member is well versed on the company's vision, mission statement, core values, objectives, and overall success criteria because these things are vital for making progress towards long-term growth initiatives. 

As part of this process, consider using a benchmarking survey to get a better idea of where your business stands in comparison to others. You can then use this information to decide which strategies are best for aligning the values and growth objectives of everyone who's part of the company.

Since new leads will eventually need some sort of follow-up from your team, you'll have to have a strategy in place so each one is assigned specific tasks that directly relate to acquisition outcomes or sales goals. This could be a simple process such as assigning a sales representative for every 100 new leads received during a month's time frame. 

Another option would be implementing lead scoring, which enables marketing and sales departments to identify their best potential customers while simultaneously reducing the amount of time required for subsequent interactions. Most people have heard about lead nurturing, which is a vital step when looking for immediate conversions.

In order to determine the best way to scale your business, you need to have a deep understanding of what's working and why. You might not believe that traditional marketing will be effective in today's digital age, but analyzing actual acquisition data could challenge this assumption. 

For example, if you're using email marketing campaigns to generate new leads, it may be time to reevaluate your strategy since technology has made it easier than ever for customers to ignore messages from companies they aren't familiar with.

This doesn't mean abandoning them entirely because there are times where targeted lists can make all the difference in the world when it comes to moving prospects down your funnel instead of letting them slip away.

If you're still having trouble determining where best to put your focus, look for the highest-performing channels and apply what they do to other areas of your business. For example, if Facebook ads are driving more interest than any other channel, why not create a series of banner ads that link directly to similar landing pages? 

While it might take time to implement, this strategy could ultimately pay off by reducing customer acquisition costs (CAC), increasing leads generated at each stage in the conversion funnel, and elevating overall revenue.

Remember though, there's no substitute for strategic thinking so don't be afraid to lay down everything you know about the industry before coming up with an approach that will help you reach success sooner rather than later.


Understanding Customer Acquisition Cost

The Customer Acquisition Cost is the total revenue lost after subtracting out the cost of acquiring new customers. Understanding these costs allows you to make informed decisions about your customer acquisition channels, like SEO vs paid search. 

Customer Acquisition Costs (CAC) can be expressed in either monetary or non-monetary terms.  For example, CAC may include expenses such as advertising campaigns, sales commissions, and employee salaries. On the other hand, you could also use "opportunity costs" which are defined as "the potential gains that could have been realized if alternative choices had been made".

This means not only would you have to pass on certain opportunities while achieving your current goal but it could hinder future ones so you should always try to minimize the time required to achieve something.

For example, you wouldn't want to wait until your startup crashes and burns before getting a job at Mcdonald’s because you'd have to start all over again after building the company from scratch only to see it fail. A better option would be gaining experience in areas that can contribute the most to both the development of your business as well as future opportunities for career growth.

Recurring revenue is another important metric since it helps you figure out which recurring payments are worth paying upfront costs for acquisition. That way, if necessary, you can eliminate or adjust campaigns that aren't giving back what they're costing so you can spend more time on topics that matter most to your bottom line.

At the same time, don't be hesitant to chase after new leads if the return on investment is worth it in the long run.

As part of your customer acquisition strategy, you should also consider how each channel can be integrated with others in order to create an experience that's both engaging and enjoyable. This will help establish a strong foundation upon which you can stand tall and achieve your preferred goals for success.

For example, an effective plan may involve using highly targeted banners on Facebook that link out to blog posts then working with writers or content specialists to develop these posts into something that solves their pain points while providing plenty of value along the way. 

With this approach, consumers won't just know about your business, they'll know why they want to use it so they're more likely to become a full-fledged customers.

You should also consider how channel preferences may change over time as people have different needs at different points in their lives. For example, if you sell dog food and someone tells you they have a new puppy you don't want to come across as an alarmist so it's best to be as friendly as possible but keep the message simple so they understand it without being overwhelmed. 

On the other hand, if someone mentions that they're getting ready to visit family for Thanksgiving you can provide more details about how your product is perfect for entertaining guests. As long as there's something valuable that your audience receives, the word-of-mouth referrals will be likely to spread like wildfire whenever your potential customers are impressed by what they receive from you.

You should also pay close attention to the return on investment (ROI) as well as consider how it can be improved through different tactics like A/B testing ads and landing pages to determine which versions are most effective.

For example, if you find that your sales funnel is too complex or confusing people may misinterpret what they're supposed to do at an essential step so you should eliminate confusion by providing clear instructions on what needs to happen without being pushy or irritating them in any way.

At the end of the day, understanding your customer acquisition costs will help you make better decisions about where to allocate resources so there'll be less guesswork involved.

Since these metrics vary depending on the industry, location, and other factors it's always best to test different options to see which ones perform the best in order to free up time for other areas of your business that might need attention.

As you can see, there are plenty of things that must be considered when it comes to customer acquisition since your strategy will set the tone for all future activities relating to this channel. With this in mind, make sure you take the time to craft a well-rounded approach because having one is crucial if you ever want to achieve success in this niche.


Customer acquisition funnel strategies

Now that we've covered the essentials of customer acquisition, let's talk about how you can create a winning strategy for your business.

When most people think about this topic they tend to focus on acquiring new customers and forget about keeping the ones they already have. Although it may seem like creating an effective plan will take months or even years before you reach your targets, most businesses don't spend enough time considering their current strategies so there's plenty of room for improvement in this department.

The good news is once you find out what works well for others then you'll be able to test different ideas until you find one that delivers fantastic results without breaking the bank.

1.Building Your Funnel

As you can see, there are plenty of actual strategies that will help you acquire new customers but the most important thing to do is create a funnel that makes sense for your business since having one will lead to better results in the long run.

For example, if you're running an eCommerce company then it's crucial to provide consumers with enough reasons to complete their purchases before they get cold feet or forget why they were initially excited about making transactions with you.

A high percentage of visitors who enter your sales funnel will leave without buying anything so it's essential for businesses like this one to avoid sending too many emails because these messages will only make people feel overwhelmed and irritated.

It may be tempting to bombard potential customers with promotional offers or try to drive more traffic to the sales page but the reality is that most people will become annoyed by this type of behavior so you should always do your best to avoid it at all costs.

As I mentioned earlier, there are plenty of different strategies that you can implement but they won't show results until you're able to streamline them into a cohesive acquisition funnel since this process will allow you to spend less time trying out different tactics and more time focusing on improving an existing strategy or creating new ones.

Most businesses struggle because their strategies aren't well thought-out and as a result they tend to rely solely on their gut feelings when making decisions. As I previously mentioned, there's no way for you to know if certain ideas will work unless you are able to test them in real-world situations. \

For example, you might assume that giving people a bonus when they make their first purchase will be effective but without testing this idea you'll never know if it's true or not until you run an A/B split test to gauge potential results.


2. Awareness

Once you've taken the time to create a high-quality funnel then it's finally time to move on to the next step, which is where your awareness campaign will come into play.

Although this may seem like an easy strategy that won't take long before you see results, many companies try this approach and simply give up after not making any sales whatsoever. Keep in mind that it can take weeks or even months before you start generating revenue so don't let temporary setbacks put too much pressure on yourself or make you feel discouraged.

Since most businesses are different there's no way for me to provide specific examples of how awareness campaigns should be implemented but I assure you that if you're able to combine these activities with other customer acquisition strategies then you will be able to find success in this department.


3. Interest

Once the customer is aware of your brand and products then it's time to make them interested before they can move on to the next stage, which is where many businesses lose potential customers because they aren't willing to do what's necessary in order to make their campaigns more effective.

If someone visits a website and takes a look around but doesn't bother trying out any of the products or services that are being offered then it means that they're not yet ready to become customers so don't push them until they've taken enough time considering whether or not your business is right for them.

If you try too hard then you'll only irritate people and send them running in the opposite direction so it's important that you be patient and avoid taking any hasty action.

4. Consideration

A common mistake among eCommerce companies is to send potential customers directly to their shopping carts, which only results in people feeling overwhelmed so they decide against making purchases.

It can take days or even weeks for someone to decide whether or not they should commit to buying something so the best way for businesses to approach this part of the acquisition funnel is by sending people through a series of consideration stages where they are able to ask more questions, get answers from support reps, read customer reviews and compare items before making financial transactions.

Although there are plenty of different strategies that you can implement during these stages some of the most effective ones include offering coupon codes, encouraging people to subscribe to newsletters, running contests and sweepstakes, providing free shipping on specific items or creating special sale events where people are able to get discounts off their purchase prices.

5. Intent 

Once someone is ready for a sale then it's time for you to start bringing them in by moving them along through the intent stages until they're finally ready for evaluation. 

If you force customers into purchasing before they're fully committed then your business will have higher rates of refunds which means that you'll have wasted money on campaigns that cause more headaches than anything else so be careful not to rush things since all of your hard work could go down the drain faster than you would ever expect.


6. Evaluation

Evaluation is a crucial part of the acquisition funnel because it's in this stage where people finally decide whether or not they should make a purchase.

Although many businesses believe that offering free trials is enough to generate revenue from their campaigns, you have to keep in mind that people who are just browsing around aren't likely to sign up for anything so when someone enters your evaluation stage then it means that they're interested in becoming customers and willing to try out your products or services.


7. Purchase

The final stage of the acquisition funnel is where you finally close sales and generate revenue from your campaigns.

It's essential that businesses not only have a website that's up and running but also a strong plan in order to successfully complete transactions without losing any customers because once someone has made it this far then they're already familiar with your brand, excited about what it has to offer and ready to make a purchase so there's no way for them to turn back at this point.

As you can see, the customer acquisition funnel isn't as simple as marketing-specific items on social media or sending people directly to an online store during certain months of the year since each part serves its own unique purpose and must handle carefully in order for everything else to work.

Although this process may seem like a lot of work, there are plenty of tools that can make your job easier by automating several aspects of it so you only have to worry about the parts that matter rather than doing everything manually. 

By following these steps, you'll be able to promote your business more effectively while simultaneously improving its standing within your target audience's minds until they finally become customers who enjoy purchasing items from you.


Conclusion

While the customer acquisition funnel may seem like an unimportant aspect of marketing at first, it can make a world of difference in terms of how effective campaigns are and whether or not they succeed.

While most businesses decide to promote their goods and services with generic ads that don't provide any useful information, others use coupons, social media promotions, and email newsletters as a way to successfully engage with their target audience.

In order to create a strong strategy that will lead your business towards success, you have to consider all of the steps that take place from the initial awareness stage where people first learn about your brand and don't even realize it until they find themselves purchasing items directly from you due to an effective evaluation process during which they realized what your products and services were capable of doing for them and everything in between.

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Aryan Vaksh

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