“How can we effectively acquire new customers?” It’s a question we hear over and over again from our clients and a growing challenge for retailers, in particular. As an advertising agency, we can support by serving ads to new people and measuring conversion, but this only captures a fraction of the potential and is not always sustainable long-term.
Even with a concentrated advertising effort, many brands still struggle to gain traction with unestablished audiences. Human behavior has evolved, competition has grown, and consumers have high expectations when choosing where to spend their money. Additionally, many retailers have their own set of internal challenges, including tight margins, siloed teams, and antiquated measurement and other systems, which lead to slowed adoption of updated strategy, hesitation in testing new channels, and strict efficiency goals. The challenge this presents is the need to evolve not only the way you currently build your brand and reach people but, in many cases, redefining who you’re trying to reach.
When it comes to defining your audiences, there are three ways to look at your potential customer growth: increasing revenue from existing audiences, acquiring new people in your current target market, and expanding into your ideal target market. Since we are discussing new customer acquisition, we will focus on the latter two, but keep in mind that it is still important to focus on retention and loyalty.
Acquiring new people in your current target market
Your current audience is likely your lowest hanging fruit in terms of boosting your new customer acquisition but, depending upon your maturity in the market, it will also have a lower ceiling since this is where you’ve already invested most of your resources. Depending on how long your brand has been in business, your current target market is likely growing (or aging) and changing. Changes in your audience should force you to consider what your ideal target market looks like - whether that means growing with them or redirecting efforts to a new segment.
Expanding into your ideal target market
Often, expansion consists of reaching younger generations. A direct quote from one of our retail clients: “Our current customers are literally dying, and we desperately need to tap into younger audiences.” In this case, it’s not an option to evolve the brand and growth with their current audience, so this retailer needed to pivot their strategy to appeal to generations with buying power and a longer lifespan. In fact, we encourage most of our clients to think ahead to the next decade and start investing in building loyalty with younger people, while being careful not to alienate current customers.
Unfortunately, there is no silver bullet when it comes to successful and sustainable new customer acquisition, and a number of both short- and long-term tactics are required. This article series will consist of two parts, with this piece focusing on short-term advertising tactics and the next piece focusing on long-term acquisition strategy.
New Customer Acquisition Short-Term Advertising Tactics
Clients often ask us how they can increase customer acquisition using their existing paid search budget. And, while there are certainly tactics to achieve this (more on this below), the truth is that expanding exclusively in paid search only captures people who are actively searching. Only 21% of online time is spent in search*, so not all audiences actively use networks like Google and Microsoft in the direct response manner we, as marketers, would hope. Expanding efforts not only in terms of channels but also in the formats and objectives in those channels is our first step in attracting untapped audiences to convert. Our approach consists of partnering closely with our clients to understand their challenges, goals, marketing program as a whole, and upcoming initiatives. Then, we can create an expansion strategy, identifying which channels and tactics will work best to achieve their goals. Many times, we recommend adding Pinterest ads to the marketing mix, as 89% of pinners get inspiration from Pinterest in their path to purchase, and 97% of searches on Pinterest are non-branded, making it an ideal platform for new customer acquisition for many verticals.
One of our retail clients, for example, traditionally relied on catalog and paid search for customer acquisition and was challenged with driving incremental demand and sales at a profitable efficiency. With our Pinterest advertising strategy, we achieved a 400% increase in new customer acquisition in the first 90 days, with a 314% increase in reactivation of dormant customers.We create a thorough testing strategy for all clients so that, as we expand our efforts, we can quickly optimize and provide insights back to our clients. We also customize creative per channel and audience target to ensure people just learning about the brand are receiving relevant messaging in an engaging format for the platform where we are reaching them.
Measurement is an important part of channel expansion to really understand the impact of customer acquisition tactics. More often than not, brands require the same strict return on ad spend (ROAS) goals for their top-of-funnel efforts as they do on their search or remarketing campaigns, and this is inherently counterintuitive to the objective. The next step is understanding that advertising KPIs will vary just as campaign goals differ by audience (ex: new versus returning). The hesitation to invest in upper funnel without achieving a measurement revenue return is understandable, and most teams need to prove a direct ROAS to justify spending.However, this is where the strategic approach and testing plan becomes crucial. At Adlucent, we take a performance-based approach to all of our advertising campaigns for clients, including top-of-funnel, and manage an entire channel or digital marketing program holistically to ensure an overall desirable return in the channel.
This chart summarizes our recommended approach to leveraging channels throughout the buyer journey, the role of media, and which KPIs to optimize toward:
Test New Creative
This sounds like an obvious pointer, but we find that our clients can be hesitant to invest in creative and test unique approaches due to brand restrictions or lack of resources. Testing new creative is low-hanging fruit when it comes to improving performance in any push marketing channel, especially if you’re challenged with customer acquisition for multiple reasons.
Switching up creative in current campaigns in channels like Facebook, Instagram, and Pinterest, is easy for many brands and allows them to capture untapped audiences in the existing program and budget. On Facebook and Instagram, for example, the algorithm will serve the creative type to the people within the audiences you are targeting that it knows will get the best engagement. So, only the people in your targets who commonly engage with carousels and static images will get your ads if you exclusively rely on carousels and static images. If you were to serve Stories to the exact same audience targets, you would start to reach people within your existing target audience who are likely to engage with stories. An Adlucent client in the furniture vertical achieved a 33% cost-per-lead improvement by launching Instagram Stories with Stories-friendly lightweight motion creative, versus their traditional newsfeed ads. With this success in mind, you can still test the different creative and format options in your current campaigns even if you don’t have incremental budget to add or an appetite to test new audiences. Regardless, you are likely reach highly relevant people you haven’t targeted before.
Another creative tactic to test is utilizing user-generated content (UGC) in your advertising, especially if your goal is to engage younger target markets. Generation Z lives in a world where technology is a given, and two-way conversations and interactions with brands are expected. An overwhelming 90% of US consumers report user-generated content to be the most influential part of their purchase decisions, with 97% of people under the age of 30 citing it as most important. The rise of social media is to thank for this, and younger generations see UGC as trustworthy and credible, versus the traditional one-way street of brand pushing messaging to users. UGC can include influencer content, users’ shared images, reviews, social media comments, and videos using your products or showcasing your brand.
Up and coming skincare brand Curology, whose average consumer is a 22-year old female, has seen over 200% growth year over year, while the traditional skincare brand Rodan & Fields is seeing revenue decline. Curology consistently features customers in their social ads, as well as on their website, to build trust and showcase the results of their products. Their products are highly personalized, which is also a necessity in appealing to younger generations.
Customize Paid Search
New customer acquisition in push advertising, like paid social and display media, is pretty straightforward to target and track due to the flexibility in those channels with audience exclusions. However, the approach is a bit more involved in pull channels, specifically paid search (SEM), where we don’t necessarily know if someone has never visited the site or not based on their search query alone. To solve for this at Adlucent, we support new customer acquisition information by customizing data inputs from our clients in conjunction with our tracking pixel. These data inputs allow us to know if a consumer is new or returning, so we can optimize to new customers through adjusted KPIs, segmented campaigns, and tailored ad copy.
We start by segmenting all SEM campaigns into acquisition and retention variations, which allows us to manage each campaign variation to a specific KPI. Customer acquisition campaigns should typically have a more lenient return on ad spend goal, versus someone who has already converted and is likely receiving email and other marketing from you. Additionally, we can set category- or brand-specific KPIs by customer type. For example, if we know lifetime value for a specific brand carried is high, we can target a cost per new user target that is higher for campaigns supporting that particular product category. Using this segmentation across our paid search campaigns, we are also allowing Adlucent’s predictive bid management algorithm to optimize performance based on the appropriate KPIs.
We then manage these campaigns by making audience bid adjustments to refine performance based on demographics, in-market, and similar audiences. In the acquisition campaigns, we will also leverage ad customizers to provide personalized ad copy to searchers, like in the example below:
We were able to achieve a 60% increase in new customer orders, with no impact on cost per order, for one of our clients recently using this approach. So, make sure you are refining your search strategy, in addition to the other upper-funnel and creative tactics mentioned here, when identifying opportunities to improve new customer acquisition.
These tips should provide a start to your immediate, direct-response focused acquisition efforts with paid channels specifically. Contact us for new customer acquisition strategy, execution, and reporting support, and stay tuned for part 2 of this series, which will cover more strategic opportunities, including competing with Amazon, evolving your brand positioning, and how to reduce friction for shoppers.
- *Salesforce 2019 Customer Journey Review