What is customer acquisition? Channels, strategies, and examples

You can’t run a successful business without customers — and you can’t get new customers without an effective customer acquisition strategy. 

In the early days of business, the right customer acquisition tactics will help get your venture off the ground and drive your first sales. 

But customer acquisition isn’t just for new startups. Even if your client roster is full or your shop floor is thriving, it pays to continuously engage prospective customers and generate fresh interest in your business.

Keep reading to learn what customer acquisition is, why it matters, and how to create your own customer acquisition strategy.  

What is customer acquisition?

Every business needs customers. Whether you’re exploring how to make money online, running a local high street café, or setting up a limited company — you can’t operate profitably or sustainably without paying customers.

And that’s what customer acquisition is all about: attracting potential customers and convincing them to buy your products or services.

When focusing on customer acquisition, you’ve got two main objectives:

1. To drive awareness and engagement. You want potential customers to know that you exist, and to understand what products or services you’re offering. This aspect of customer acquisition is all about raising your profile, connecting with your target audience, and making a good impression.

2. To convert prospects into paying customers. Next, you want to encourage prospective customers to spend their money. You’ve got them through the door (literally or proverbially) and now you need to convince them to sign up, make a purchase, or book an appointment. 

A good customer acquisition strategy covers both, and we’ll show you how to create one for your business later on in this guide.

What is a customer acquisition strategy?

A customer acquisition strategy outlines your overarching plan of action to attract, engage, and convert new customers. 

It determines which customer acquisition channels you’ll focus on, as well as the techniques and tactics you’ll use across each channel — factoring in the unique goals, preferences, and behaviours of your target audience. 

If you’re a sole trader or small business owner with limited time and resources, the idea of a customer acquisition strategy might seem superfluous. Between navigating the legal requirements for starting a small business, figuring out the best pricing strategies, and fine-tuning your approach to operations management, is a dedicated customer acquisition strategy really necessary?

The short answer is yes — for reasons we’ll outline in the next section. And, while it might feel daunting on top of everything else on your to-do list, you don’t need any specialist expertise or a big budget to develop one. 

As long as you know how to identify your target market and find channels and techniques that resonate (and we’ll show you how to do all of those things), you can consistently nurture and improve your customer acquisition efforts.

The importance of customer acquisition 

Customer acquisition is a fundamental part of running a successful business. No matter the type, size, or maturity of your business, you need customers to keep you afloat. 

An effective customer acquisition strategy enables you to:

Drive revenue

A steady stream of customers means a steady stream of income, helping to grow your revenue and maintain a positive net cash flow.

Foster long-term viability and security

You don’t want to rely too heavily on a single pool of customers or a specific market segment. Customer acquisition is an important part of small business risk management, helping you to continuously diversify your customer base.

Grow your business

If you’re looking at how to scale a business or expand into new markets, customer acquisition has a pivotal role to play. 

Perhaps you’re in the early stages of entrepreneurship, exploring small business ideas and figuring out how to start a business. The right customer acquisition tactics will help you get your first customers through the door and start making money. 

Maybe you’re in the post-launch phase and thinking about how to run a business that will survive long-term. By consistently focusing on new customer acquisition, you can stabilise your business, build resilience, and boost your staying power. 

Even if business is booming and you’re exploring business growth strategies, customer acquisition will prove crucial for remaining profitable as you scale up.

Customer acquisition vs. customer retention

Customer acquisition looks at how to get clients, while customer retention considers how to keep them long-term. They’re both essential for success, albeit in different ways. 

You need both customer acquisition and customer retention to run a successful business — but you want to focus your efforts in a way that maximises profitability and yields the best ROI for your small business budget.

Given that customer acquisition tends to be more expensive and less profitable than customer retention, it’s important to strike the right balance. 

With that, let’s consider how to calculate the cost of customer acquisition for your business. 

What is customer acquisition cost (CAC) and how is it calculated?

As with all of your small business expenses, it’s important to keep track of what you’re spending on customer acquisition — and whether or not it’s paying off. This is where customer acquisition cost (CAC) comes in useful.

If your customer acquisition costs are relatively low, that’s a good sign that your customer acquisition efforts are both efficient and effective. 

A high CAC, on the other hand, may indicate that you’re spending too much without reaping the rewards. If that’s the case, it may be time to rethink your customer acquisition strategy.

How to calculate customer acquisition cost (CAC)

To calculate your customer acquisition cost (CAC) for a given time period, you’ll need the following numbers to hand:

• Total amount spent on customer acquisition within that specific time frame. Say you spent £500 developing a marketing strategy for your small business plus £100 on targeted ads in Q3, your total customer acquisition expenditure comes to £600.

• Total number of new customers acquired within that same period — for example, 10 new clients who came to your salon.

Then use the following customer acquisition cost formula:

Based on our example data, you’d calculate the CAC as follows: 600 ÷ 10 = a customer acquisition cost of £60 for Q3. 

If you’re a small business owner with limited operating cash flow, you might now be asking yourself: How can we reduce/lower our customer acquisition cost?

The key is to leverage free and low-cost channels, and to prioritise customer acquisition tactics that are most likely to resonate with your target audience and result in a conversion. 

We’ll take a closer look at how to drive customer acquisition on a small budget shortly. Before we do, let’s introduce another key piece of the puzzle: the customer acquisition funnel.

The customer acquisition funnel (and what happens at each stage)

The customer acquisition funnel is a useful tool for understanding the different steps that lead up to a customer purchase, allowing you to optimise your customer acquisition efforts with each stage in mind. 

Note that there’s no universally-agreed version of the customer acquisition funnel; you’ll find many different variations online. However, they all allude to the same key stages: 

1. Awareness

In marketing terms, this phase is known as “top of the funnel” (or TOFU). This stage is all about connecting with your target audience, making them aware of your products or services, and generally raising your visibility. 

To drive awareness, you might focus on things like:

• How to advertise your business to reach your target audience

• How to use social media for your small business

• How to optimise your website for online and local search

2. Consideration

Now we’re in the middle of the funnel (MOFU). This is when prospective customers become more engaged with your business. They might sign up for your newsletter, read through customer reviews, or visit your website for more information. 

At this stage, your customer acquisition efforts might focus on:

• Leveraging email marketing for your small business, for example by building an email list and sending out valuable newsletter content to further engage prospects

• Hosting events or workshops where prospects can learn more about your products or services

• Harnessing the power of social proof to convince prospective customers to convert. You might encourage existing customers to leave reviews, share case studies and success stories, and publish positive testimonials, for example.

3. Conversion

At the bottom of the funnel (BOFU), prospects become paying customers. This happens when they make a purchase, sign up for a service, or book an appointment. 

To guide your customers through the conversion phase, you might:

• Offer special discounts or promotions for new customers

• Send personalised recommendations and offers

• Take steps to streamline and improve the checkout process — weighing up the best online payment methods, for example, or making sure you’re equipped to take cashless payments in store

Your customer acquisition strategy should cover all stages of the funnel — from driving awareness and nurturing engagement, right through to securing a conversion.

How to create a customer acquisition strategy for your business

A good customer acquisition strategy guides your efforts to attract new customers. It ensures you’re focusing on the most suitable channels for your target audience and leveraging the most effective methods and techniques. 

Here’s how to create a customer acquisition strategy for your business. 

1. Identify your target audience

First and foremost, be clear on who you want to attract with your customer acquisition strategy. 

This is crucial for making sure you’re marketing to the right people; people who are likely to be interested in your products and services. 

Objective:

To develop a thorough understanding of your ideal customers: who they are, what channels they use, and what they value — be it low prices, locally-sourced ingredients, or a super-speedy turnaround. 

Action points:

• Analyse your existing customer base (if you have one). How did you acquire your current customers? What do they have in common? Based on what you know about them, why did they choose your business?

• Conduct market research to survey existing or prospective customers about their interests and preferences in relation to your products or services. If you’re considering how to do market research for a small business on a limited budget, focus on free tools like Google Forms, SurveyMonkey, and social media polls.

• Create customer personas or profiles. Based on what you’ve learned about your target audience, create personas that represent your ideal customers. Include any relevant data that can help to steer your customer acquisition efforts — such as age group, location, interests, preferred communication channels, values (in relation to your products or services), and behaviours (e.g. regularly shops online).

2. Define your unique value proposition 

The next step is to consider how to create a USP for your business. In other words, what’s so great about your business? Why should customers choose you?

Your USP, or unique selling point/proposition, captures the distinct qualities that set you apart. It highlights the benefits you can offer to your target audience, giving them a compelling reason to buy from you or use your services. 

Objective:

To clearly understand, and be able to articulate, why a prospective customer should choose you. 

Action points:

• Double down on your strengths. Think back to when you were brainstorming side hustle ideas or weighing up how to make extra money. You probably landed on your business idea because it’s something you can do especially well, and because you saw a gap in the market. With that in mind, create a list of your top qualities and strengths. Aim for no more than three — you want to keep your USP highly focused. 

• Assess the competition. Your USP should capture not only what makes you great, but also what makes you different. As for how to do a competitor analysis, start by identifying your top 3-5 competitors. Then look at their websites, visit them in-store, or check out their social media to see how they’re positioning themselves. What value are they highlighting? What do you do differently and better? That’s your competitive advantage.

• Craft your value statement. With your strengths identified and competitor research complete, try to put your USP into words. Write one or two sentences that capture what you do and how it benefits your customers. For example: “We bake all of our cakes, pastries, and loaves fresh every morning using locally-sourced ingredients — providing our local community with delicious, environmentally-friendly delights on a daily basis.”

3. Decide what customer acquisition channels you’ll use

The next step in defining your customer acquisition strategy is to choose your customer acquisition channels. 

A customer acquisition channel is any platform or medium you use to connect with your target audience — say, Instagram, email, print advertising, or your own website. 

Picking the right channels is key. It’s no good spending money on printed flyers if you’re targeting an online customer base all over the country. Likewise, if your market research found that your ideal customers don’t tend to use social media, you wouldn’t want to prioritise Facebook and Instagram. 

Objective: 

To identify the customer acquisition channels that make most sense for your business and your target audience. 

Action points: 

• Consider what you know about your target audience. Where do they spend their time? How do they prefer to be communicated with? Ultimately, where will they be most receptive to your marketing and customer acquisition efforts?

• Learn from competitors. Refer back to your competitor research to see which customer acquisition channels your competitors are focusing on. If all your competitors are on Instagram and have a strong following, for example, that’s likely an effective channel to focus on.

• Consult our list of customer acquisition channels (in the next section of this guide) and select the channels that make most sense for your audience and your business. Think about whether you’ll focus on online channels, offline interactions, or a mixture of both — and opt for quality over quantity. You don’t want to spread yourself (or your budget) too thin, so choose just two or three channels to begin with. 

4. Choose your customer acquisition tactics 

Once you’ve decided which channels you want to focus on, it’s time to think about the customer acquisition tactics you’ll use across each channel. 

These are the specific methods you’ll use to attract new customers, engage them, and hopefully convince them to make a purchase. 

If you’ve identified email as one of your main channels, specific customer acquisition tactics might include adding an email sign-up form to your website and creating a monthly newsletter. 

If you want to focus your customer acquisition efforts offline, you might choose tactics such as printed flyers, promotional posters placed in local hotspots, or eye-catching signage outside your shop front. 

Objective:

Outline specific customer acquisition tactics you’ll use across each channel. This ensures you have a clear plan of action, breaking your customer acquisition strategy down into concrete tasks.

Action points: 

• Consider your time and budget. Ideally, your customer acquisition efforts will be consistent and ongoing — so choose tactics that you can confidently commit to and maintain.

• Think about how to measure success. For each customer acquisition tactic you implement, define what success looks like. You might measure engagement on social media through likes and follows, for example, or track how many sales you make after each email newsletter. For offline tactics, you might measure success through customer feedback and in-store sales numbers.

• Experiment with different tactics. A good customer acquisition strategy is agile and adaptable. Be prepared to try different approaches across your chosen channels to find what works — experimenting with various content types on social media, for example, or trialling different offers and discounts in-store.

Customer acquisition channels

Every business has its own unique approach to customer acquisition. You might focus solely on online channels for your e-commerce business, or use both online and offline channels to increase footfall to your physical store. It all depends on your business and your target audience.

With that in mind, let’s outline some of the most popular customer acquisition channels worth considering. 

Online customer acquisition channels

• Your own company website and/or blog.

• Online advertising via platforms such as Google Ads.

• Social media sites like Facebook, Instagram, and TikTok.

• Email marketing.

• Online communities and forums.

• Online marketplaces like Amazon and Etsy (especially useful if your business idea involves things to make and sell online).

• YouTube (if you’re using video content marketing as part of your customer acquisition strategy).

• Online directories and listings such as Yelp and Google Business Profile.

• Online review sites such as Google, Yelp, and Trustpilot.

Offline customer acquisition channels

• Print advertising — placing ads in newspapers, magazines, and industry publications, for example.

• Direct mail — e.g. posting flyers through letterboxes.

• Local billboards and posters.

• Community and networking events.

• In-store signage.

• Referral programs and word-of-mouth.

Next, let’s explore some customer acquisition techniques you could use across the various channels.

7 proven tactics to help with customer acquisition

Whether you’re a brand new start-up or an established small business, consider the following customer acquisition techniques to attract new customers, engage your target audience, and boost conversions. 

1. Drive engagement on social media

Whether you’re exploring how to make money from home or honing in on brick-and-mortar business opportunities, social media is one of the most effective platforms for attracting and engaging with prospective customers.

From Facebook to Instagram, LinkedIn to TikTok and beyond — the goal is to grow your following, connect with your target audience, and get your products or services on their radar. 

How to drive engagement on social media:

• Post regularly to build momentum and keep your audience engaged.

• Use relevant hashtags to increase the visibility of your posts, and consider creating a unique hashtag that your followers can use when talking about you online.

• Respond to comments and messages in a way that feels personal and authentic.

• Share or repost relevant content posted by your customers/followers, as well as any industry-relevant content shared by similar businesses in your niche.

• Experiment with different content types and formats such as polls, videos, stories, and giveaways.

• Follow and interact with other business profiles with a similar target audience (this not only helps with new customer acquisition; it’s also a great form of small business networking).

2. Create high-value content 

If you want to attract and win new customers, focus on providing high-value content.

This helps to build trust, positions you as a credible authority within your niche, and, most importantly, goes some way to addressing your customers’ needs and pain-points — making them more inclined to eventually make a purchase or book a service. 

It doesn’t matter if your business is centred around hobbies that make money, providing professional consulting services, or running a brick-and-mortar establishment; use your unique knowledge and expertise to create insightful content that informs, educates, and inspires. 

High-value content ideas to help with customer acquisition:

• “How-to” guides that explain or show your audience how to do a particular thing (in the form of a blog article or a video) or quick tips (ideal for social media and email newsletters).

• Informative content that demystifies a certain concept or answers potential questions your audience might have (e.g. “What is…?”, “What are the different types of…?”).

• Infographics highlighting interesting data or trends (ideal for social media).

• Behind-the-scenes content showing what you do and how you do it — ideal for social media posts and stories.

• Share testimonials, positive reviews, case studies, or before-and-after photos to highlight how you’ve delivered value to existing customers.

• Q&A sessions or FAQ content hosted on your website, for example.

• Hot takes and thought leadership content.

3. Level up your local SEO 

SEO (search engine optimization) isn’t just for those looking at how to start an online business. If you’ve got a café, restaurant, shop, or salon, you want to make sure that local customers can find you through Google.

When a customer searches “Hair salons near me”, for example, or “Vegan brunch in Brighton”, they want to see location-relevant results. And, as a business owner, if you can optimise your online presence for local search, you’ll increase your chances of being found. 

Tips to improve your local SEO:

• Claim and verify your Google Business Profile (a free Google tool that ensures you show up in search results and on Google Maps).

• Make sure your Google Business Profile is up-to-date with relevant photos, your opening times, address, phone number, and website URL.

• Optimise your website for “Near me” searches — for example, by including location-relevant terms such as “Hair salon in the heart of Bexley Village”.

• List your business with relevant online directories (e.g. Yelp, Thomson Local, Cylex UK).

4. Leverage email marketing 

Whether you’re looking at how to start a side hustle and acquire your first customers with a low-cost strategy, or want to double down on customer acquisition to scale your existing business, email marketing can yield great results.

It’s direct, it’s personal, and it’s relatively inexpensive. And, with the right software, you can set up automated email sequences — allowing you to engage potential customers with relevant content depending on where they’re at in the customer acquisition funnel. 

How to use email marketing as part of your customer acquisition strategy:

• Make it easy for prospects to subscribe to your email list. Place an opt-in form on your website and on social media, and collect email addresses in-store (if relevant).

• Create lead magnets to offer value in exchange for a prospect’s email address. You might offer a 10% discount for first-time email subscribers, for example, or request their email address in exchange for a free ebook.

• Send a welcome email to new subscribers introducing your business, what you do, and the value you can offer.

• Personalise your emails; address each recipient by name and provide personalised recommendations and offers.

• Guide prospective customers to purchase with well-timed emails at specific moments; for example, you might set up an automated ‘abandoned cart’ email to encourage a customer to complete their order.

• Create a newsletter to foster ongoing engagement (and be sure to deliver high-value content such as news, tips, and insights). 

• Include a clear call-to-action (CTA) with each email that guides the user to a specific place — your product page, for example.

5. Harness the power of social proof 

When evaluating a brand or business, consumers tend to look to their peers for guidance. If they see that others have had a positive experience, they’re more inclined to purchase. 

That’s the power of social proof — and, as a business owner, you can harness that proof to attract new customers and increase your chances of a conversion. 

How to leverage social proof for customer acquisition:

• Prioritise customer satisfaction so that existing customers can vouch for your business. Continuously look at how to improve the customer experience (CX) — by creating a welcoming environment in your brick-and-mortar venue, reducing wait times, and delivering high quality products and services (to name just a few).

• Encourage and incentivise referrals — you might offer a referral bonus, for example, or a special discount for both the referrer and the referee.

• Continuously gather reviews and ratings. As for how to ask customers for a review, consider adding a feedback widget to your website, setting up on-site QR codes, or asking via email — whatever feels most natural and relevant for your business and your customer base.

• Publish reviews and testimonials on social media, on your website, or as part of your email newsletter content.

• Showcase customer success stories and case studies.

6. Offer discounts and special offers for new customers

We mentioned earlier that there are two main components of customer acquisition: first, driving awareness, and second, encouraging prospects to purchase. If a prospect is on the brink of converting, a special offer or discount can provide the final nudge they need. 

Whether it’s 10% off their first order from your online shop, or a free add-on when they book their first appointment in your salon — sweetening the deal is a great way to get new customers on board. 

New customer discounts and special offer ideas:

• Offer a 10% discount on a customer’s first order (and promote it on your website and/or in-store).

• Offer free shipping or a small free gift with a customer’s first purchase.

• Offer a complimentary add-on when a customer books with you for the first time — for example, a free hair conditioning treatment with their first cut and colour.

• If you run a service-based business, create special packages or bundles at a discounted price for new customers.

• Partner with other local businesses to offer joint discounts. If you run a personal training business, for example, you might partner with the local smoothie bar to cross-promote and offer mutual new customer discounts.

7. Make it easy for prospects to convert

This isn’t just a strategy; it’s a non-negotiable best practice if you want to succeed at customer acquisition. From a practical perspective, you must make it as easy as possible for prospective customers to go through with a purchase or book an appointment.

If the process is overly complicated and cumbersome, there’s a high risk that the customer will give up — and, if they do, it’s unlikely they’ll return. So: streamlining and optimising every single aspect of the conversion process is key.

How to optimise the conversion process:

• If you’re running an ecommerce or online business, allow customers to proceed as a guest if they just want to make a quick purchase without setting up an account.

• If you run an appointment-based business, offer multiple ways for customers to book appointments — online, by phone, and by email, for example.

• Reassure customers that you take payment security seriously — you might display security badges on the payments page of your online store, for example.

• If you’re taking payments in-store, reduce wait times by taking tableside payments — you might place scannable QR codes on dining tables, install self-service kiosks, and invest in portable card machines.

• If tableside payments aren’t possible, make sure you have efficient point-of-sale (POS) technology in place (like SumUp’s Point of Sale Pro).

• Provide multiple payment options for customers to choose from. Compare different payment options for small businesses to determine which methods are best suited to your business and your target audience.

• Consider a buy now, pay later scheme (if applicable to your business).

• Provide exceptional support and good customer service, at the point of purchase and beyond.

Customer acquisition strategy examples

1. Facetheory skincare

Founded in Sheffield in 2015, Facetheory is a great example of how humble business ideas from home can take off in unexpected ways. Now shipping to over 100 countries worldwide, this sustainable, cruelty-free skincare start-up is testament to the importance of a strong customer acquisition strategy.

So how do they do it?

Facetheory uses a number of tactics to nurture customer acquisition. In particular, they leverage email marketing, special first-order discounts, and social proof through reviews and testimonials — which they feature proudly on their website.

2. Indian Rose lifestyle boutique

Indian Rose is a unique clothing and gift boutique located on Sidcup High Street in Kent. Being a brick-and-mortar business, they rely heavily on footfall and acquiring new customers within the local community.

As such, a key part of their customer acquisition strategy is optimising their online presence for local search. Throughout their website, you’ll find lots of location-relevant terms and keywords such as “Award-winning lifestyle boutique in Sidcup” and “located on Sidcup High Street”. 

Search “gift shop Sidcup High Street” on Google and Indian Rose features prominently in the search results. They have a listing on Yell, and their Google Business Profile ensures they appear on Google Maps with all their business details. 

Indian Rose provides a great example of how optimising for local search can help increase your visibility and attract new customers.

3. Jenny’s Hair Hut, independent salon 

Jenny Keyworth is an independent hairdresser who started her own business, Jenny’s Hair Hut, in 2017. Speaking about her approach to customer acquisition when she first started out, Jenny explains how Instagram has always been her go-to channel:

“I invested a lot of time and effort in Instagram in the early days of my business. I regularly posted reels and before-and-afters, explaining how I achieved the end result and sharing the products I used. The majority of my customers still come through Instagram, or from word-of-mouth.” 

Jenny also notes the importance of creating an attractive offer to encourage new customers to book. She researched other local salons and positioned herself at a lower price point, enabling her to acquire her first customers and start building a rapport. If you’re not sure how to price a product or how to price a service, this kind of competitor benchmarking is key. 

Now, after seven years in business, Jenny’s client roster is nearly always full. However, she continues to focus on new customer acquisition, posting regularly on Instagram and sharing any last-minute availability on her story.

Key takeaways and next steps

Customer acquisition is crucial for any business, no matter what stage you’re at — whether it’s getting your first customers through the door, diversifying your customer base to ensure financial stability, or tapping into new markets as your business expands. 

With the right customer acquisition channels and tactics, you can:

• Connect with your target audience and build awareness around your business, brand, products, or services

• Effectively communicate your value and convince prospects to convert

Not only does customer acquisition drive new sales. It’s also the first step towards building positive relationships and fostering long-term customer loyalty — another crucial aspect of running a successful business.

Next steps

If you’re just getting started with customer acquisition, start by following our four-step guide to creating a customer acquisition strategy. This includes:

1. Identifying your target audience

2. Defining your unique value proposition

3. Choosing your customer acquisition channels

4. Honing in on specific customer acquisition tactics

Refer back to the section titled “How to create a customer acquisition strategy” for more in-depth guidance and tips. 

If you’ve already got a customer acquisition strategy in place, consider conducting a SWOT analysis for your small business, focusing specifically on your customer acquisition efforts. This will enable you to:

1. Identify your strengths (S): What’s currently working well in terms of attracting and engaging new customers? This shows you which channels and tactics you should double down on.

2. Pin-point your weaknesses (W): What’s not working so well, or what’s holding you back? This is useful for eliminating ineffective channels/tactics and making improvements. 

3. Identify opportunities (O): What additional opportunities could you leverage to increase your customer acquisition? Are there new audience segments you could target, for example, or new content formats you could try?

4. Be aware of any threats (T): Are there any external factors that could impact your customer acquisition efforts? How can you mitigate them?