Tracking the Customer Lifecycle – Customer Acquisition
This guide will go in-depth through the three stages of the lifecycle; acquire, engage, and retain. In this first part, we will dive deeper into the acquisition phase.
This is the first stage when customers start experiencing a problem and start looking for the right tool for the job. Here, you should educate customers through content and FAQs to assist customers in understanding their problem during their research.
Beware, a common mistake is that companies push for the sale before understanding the users needs during this phase which can put off prospective customers. Being an authoritative source of information will build the foundations of possible conversions down the lifecycle.
- The customer begins to realize that they have a problem and start looking for solutions.
- What you should do: Provide accessible content to allow the customers to understand their problem better. These can be eBooks, whitepapers, and editorial content. Also, create FAQs from learnings of Customer Success of problems from existing customers.
- Once the customers have understood the problem more clearly, they will have a better understanding of what to look for in a solution. They now list out and compare different SaaS solutions that are available.
- What you should do: Ensure that marketing content’s voice targets specifically to what the customer is thinking about. Specifically, create comparison guides to accentuate your product offering. Use customer personas to help define and curate content to the right audience.
- At this stage, the customer narrows down their list of options and begins trialing different software.
- What you should do: Provide product trials, demos, case studies, and webinars to assist them in understanding your product offering and why it solves their problem. Use learnings from interactions of existing customers to understand why they chose your solution and provide the sales team with this information.
Key Metrics to Track
Since your goal is to drive traffic and awareness during the acquiring stage, metrics to track include:
- New visitors to your website.
- Visitor to conversion ratio – how many of those visitors go through your conversion event; whether it is signing up for a free trial, joining your newsletter, or downloading your whitepaper.
- Customer Acquisition Cost (CAC) – the cost associated with acquiring a customer to your product.
- CAC = Total (Marketing & Sales) Costs of Acquiring New Customers / # New Customers
- For example, if you spent $2000 on paid advertising and got 5 customers from that campaign, CAC would be $400 per user.
- CAC payback period – how long until we recoup the acquisition cost for a customer. Generally its best for the payback period to be less than 12 months, with 5-7 months indicating a high performer.
- CAC payback period = CAC / (ARPU * Gross Margin)
- For example, CAC is $500, and ARPU is $100, with a gross margin of 80%. The CAC payback period would be 6.25 months.
Remember, in this early stage of the lifecycle, treat your leads as someone who is looking for more information, and assist them to better understand their problem. Suppress that urge to push for a sale and instead be a thought leader for this space. Your brand name will stick with a customer’s mind and influence their solution purchase during the engagement stage, which we will go in-depth in part 2 of this guide.