Acquiring new customers is the most essential part of growth for any type of business, but it sure is costly! Customer acquisition is up to 7 times more expensive than customer retention strategies, but for small businesses, it's a necessary evil.
Well, there are ways you can cut down on these costs and improve your customer acquisition strategy. Luckily, we can help you with that! Let's talk about media mix, what it is, and how it affects the cost of customer acquisition.
What Is Media Mix?
In general, the term "media mix" is often used under the umbrella term "marketing mix." In practice, the two can be used almost interchangeably. Either way, the term refers to the ratio between marketing channels, the company budget, and the results across your entire marketing strategy.
Generally, media mix is considered a part of the overall marketing mix. However, in the digital age, that "part" nearly encompasses your entire strategy.
When we use the term "media", we aren't just referring to your video content or presence in outside media. Instead, we're referring to every communication system or channel your business uses to meet its marketing objective, hence the ability to use the terms interchangeably.
If you take a moment to think about it, you realize that every marketing tool you have requires a channel of communication. Email, SEO, social media, and PPC ads are all important aspects of your media mix, along with any other resource you use to acquire new customers.
Within each of those strategies, you likely utilize different media tools. For example, you likely use a mix of visual content (GIFs, images, infographics, videos, etc.) along with text, audio, interactive content, and plenty of others. Well, these are the strategies of your media mix.
Examples of Media Channels
Your media mix will include the different marketing channels and strategies you use. Within a media mix, you have thousands of different channels and strategies to choose from. Common examples include:
- Search engine marketing
- Search engine optimization
- Pay-per-click (PPC) ads
- Social media marketing
- Affiliate marketing
- Public relations
- TV commercials / OTT
- Newspaper ads
- Local ads
- Terrestrial radio
- Online radio
- Podcasts
The list goes on to include plenty of other channels and marketing outlets. Each of them offers plenty of subcategories, too.
For example, PPC ads include Google, Facebook, and dozens of other highly effective channels. Organic search isn't just SEO, there's also app store optimization, eCommerce, and others. Social media marketing includes Facebook, Twitter, Instagram, Quora, or any other platform you can name.
Some companies may find they have greater success with one while others lag. In that case, doubling down on what's effective in the short term and working to improve your weaknesses in the long term is appropriate. More on that later.
Examples of Media Strategies
With all of the different media channels to choose from, it's important to also understand the strategies that come with them. Different brands will benefit from different strategies, but there are commonly used examples.
For example, where is a podcast going to market most effectively? They will want to incorporate audio samples into their advertisements, so a mix of organic search, social media marketing, video ads, and affiliate marketing would be most appropriate.
No matter what type of business you are trying to market, there are always beneficial strategies. For SEO, there's content marketing that could be centered around a blog, visual content, interactive content, or any other type you want. The same goes for social media, advertisements, and others.
The right media mix depends entirely on your brand, the message you want to portray, and where you are intending to reach your target audience. A video game company is more likely to use video advertisements to display the features of their games as opposed to search ads that only use text. They're also likely to place these ads on relevant content.
While these are highly specified examples, the logic still applies to any type of company. Your brand will likely benefit from an entirely different media mix than another unrelated brand.
What Is Customer Acquisition?
Of course, customer acquisition refers to the act of bringing in new customers, which businesses need to expand or grow. For small businesses and startups, customer acquisition is often the highest priority. Failing to acquire enough customers due to a poor marketing mix is one of the most common reasons why 90% of startups fail.
Startups and small businesses are faced with enormous challenges, especially in the early days. Essentially, they have the option to either grow or flop. Among these challenges, acquiring both funding and customers stand above all else, and each of these challenges affects each other.
You may acquire enough funding to get a business started, but not enough to last forever. If you don't generate revenue within the first few months, your business is unlikely to succeed. Consequently, without enough initial funding, you're unlikely to find the customers to generate that much-needed revenue.
To succeed, businesses need to add a clear customer acquisition strategy in their business plan to implement right at the start of the enterprise. Let's talk about that.
What Does a Customer Acquisition Strategy Consist Of?
Customer acquisition strategies typically revolve around the marketing mix. Marketing and lead conversions (sales) are the two primary components of customer acquisition.
To acquire new customers, brands must reach out, build awareness, and convert interested parties into customers. In the beginning, this is the primary concern. From there, you can begin to focus more on customer retention.
However, your strategy essentially consists of your media mix. Which outlets and strategies will you use, how closely can you reach your target audience, and how much do you have to spend to acquire each new customer? These are the most important details to work out in your strategy.
What Are the Key Metrics?
If you want to understand the success of your customer acquisition strategy, you need to track certain metrics. While different companies have different concerns, examples of key metrics include:
- Customer acquisition cost (CAC)
- Churn rate
- Click-through rate (CTR)
- Conversion rate
- Customer lifetime value (CLV)
- Lead generation rate
- Shopping cart abandonment rate
- Time to conversion
The list goes on, and your brand may require more specialized metrics to achieve the best results. However, each of these metrics offers great insight into the success of your campaign, letting you know which aspects of your marketing mix need adjustment.
However, the most important one on the list is the CAC, as lowering this offers the highest potential for saving money on your marketing efforts. To determine your CAC, simply add all costs associated with acquiring new customers (marketing and sales costs) and divide it by the number of new customers acquired. Remember that, as it will come in handy later!
Common Challenges With Customer Acquisition
To understand how to build an effective customer acquisition strategy, you need to understand the most common challenges brands face when trying to acquire new customers. Here are some of the most common examples and how adjustments to your marketing strategy will help.
Reaching Target Audience
One of the greatest challenges with customer acquisition is reaching your intended audience. You can reach millions of eyes and ears, but it won't matter if those people aren't going to convert into customers, as this will only draw money from the marketing budget.
Fortunately, there are more precise tools for reaching your intended target audience now more than ever, thanks to advanced ad tools from the likes of Facebook and Google.
However, you will never reach your target audience with 100% accuracy. Your SEO content, a blog in this example, could draw in only 2% of people who are likely to consider purchasing from you. That's perfectly fine.
For example, if you're a plumbing company posting content about troubleshooting a leaky pipe and your goal is to convert readers into customers, many of them will take your information and fix their pipes themselves. However, that small minority that will choose to seek out your services is who you actually need.
While reaching your target audience is important, it doesn't have to be precise. What really matters in these instances is your cost per lead, which will be affected by how precisely you reach your intended audience.
Capturing Attention
Captivating your audience is one of the primary reasons that a healthy media mix is so important to your strategy. You can't force someone to engage with your content, so producing quality content that draws in your target audience is the only way to combat this.
For example, building a site with excellent SEO value is great, but if the information doesn't intrigue your users, then your efforts essentially go to waste. Drawing people in may not be the issue, either. While first impressions are critical, holding onto users is equally important.
Consequently, a PPC campaign could lose significant amounts of money if the ad itself is captivating, but the journey after clicking fails to live up to the same standards. Quality across the board is the only proper solution.
This hurdle is of particular concern to newer brands and startups. The cost of a high-volume PPC ad won't harm Apple or Amazon, but they could destroy a new tech startup if people aren't following through after a click. It doesn't matter if it's an abandoned cart or a bounce, it will still cost money.
Budget
Sometimes, budget concerns lead to growth failure. It's generally recommended that small businesses spend around 7% to 8% of their revenue on marketing, and possibly go higher early on.
However, if you aren't yet generating enough revenue to acquire customers with that percentage, you will have to rely on other sources. In this case, it's appropriate to seek business loans or investments to kickstart your revenue.
No matter how you intend to fund your customer acquisition strategy, or no matter how great your budget concerns are, trying to lower your customer acquisition cost will help ease your marketing budget.
Let's say you determine that your CAC is around $40. If you bring that down to $30 by improving your media mix, then you will increase your acquisition by 50% without spending an extra dime!
However, in an ideal world, a startup should have enough money on hand to cover up to 6 months of expenses with some emergency funding in reserves. Because this isn't feasible for every new company, cutting costs should be a top priority.
Desensitization
While this goes back to capturing attention, desensitization to advertisements is a serious concern, especially for newer brands.
The average American sees over 5,000 ads a day, which is only getting worse over time. Keep in mind, there are only 1,440 minutes in a day, and a third of them are spent sleeping. That boils down to over 5 ads every minute of our waking lives.
Display ads, pop-up ads, search ads, and others are everywhere on the internet. Well, this creates a major hurdle for every brand and poses a question to them all; how are you going to make your ad campaigns stand out to users?
Rising Acquisition Costs
Advertisements, SEO services, media services, and others are becoming more expensive over time, especially as they continue to evolve and increase performance.
To combat these trends, brands must work to lower their CAC in any way they can, which starts by implementing a more effective media mix.
How Media Mix Affects Customer Acquisition
Media and marketing efforts are not one-and-done strategies. Effective marketing is an ongoing, constantly evolving process, which is why companies have ongoing marketing budgets in the first place.
However, reducing these ongoing costs will increase the profitability of a company by lowering marketing expenses and increasing customer acquisition. No matter how effective a campaign is, there is always room for improvement.
Even if your ROI on your social media campaigns is $30 for every $1 spent, which is fantastic, there's still room for improvement. By improving your media mix, the quality of each campaign, and the precision of your targeting, you could significantly improve your customer acquisition rate and CAC.
By improving on weaknesses, utilizing the right growth channels, and lowering playing to your strengths, you can increase customer acquisition without increasing your budget.
Essentially, how you shape your marketing mix will determine the effectiveness of your customer acquisition strategy. It's as simple as that.
What Are the Most Important Factors of a Media Mix?
When building a growth marketing strategy, you have to consider what's most important to your bottom line. Let's talk about the most critical factors of a media mix, how they will impact customer acquisition, and how to incorporate these tools into your strategy.
Understanding Goals
Clearly defining your goals is a critical first step to developing an effective media mix. What do you want out of your efforts beyond simply increasing the bottom line? You want to be as specific as possible.
Ideally, you want to lower the customer acquisition cost and increase sales, which will boost your company's profitability. That's a great start, but applying figures to your ambitions along with a timeline is even better!
By taking a hard look at your existing metrics, you should try to develop realistic goals for each of these, but try to reach as high as you can. For example, if your conversion rates on your ads are 2% only one month into your campaign, then aim for 3% within 4 to 6 months.
While a 50% increase is a massive undertaking in that amount of time, it isn't impossible. If you don't reach your goal and wind up with a 2.5% conversion rate in that time frame, that's still a 25% increase. Apply this thinking across all of the key metrics you track.
A Strong Website
Did you know that one in four businesses still don't have a website? Well, in today's world, if you don't have a website, you simply aren't trying to compete.
A website acts as the center of your entire digital marketing strategy. The success of your entire media mix relies on the strong foundation that your website offers.
Think about it. Your entire digital presence is likely trying to direct traffic to some page on your website. Your ads have landing pages, your social media has links, and your SEO value relies entirely on the quality of your website.
For organic search, search engines like Google use over 200 factors directly related to the quality of your site to help determine your ranking. Also, PPC, email, and social media campaigns are limited by the quality of your website.
If you click on an ad with a long load time or confusing navigation system, how long will you stay on that site? By neglecting your website, you leave too many opportunities open for users to abandon their journey.
Not only that, but what better opportunity do you have to utilize your media mix and display your brand than on your website? It's a blank slate with unlimited potential to drive traffic, boost your marketing efforts, convert leads, and acquire customers.
Tracking Data
In any marketing strategy, tracking data is essential to making necessary adjustments to your campaign, strategizing, and determining what works. It all starts by defining your key metrics and developing a system to track them.
Of course, different marketing tools come with different metrics. Including your SEO, social media, and most other digital campaigns, key metrics often include:
- Click-through rate (CTR)
- Conversion rate
- Total impressions
- Total user engagement
- Bounce rate (on your website)
- Time spent on the website
- Cost per lead
The list goes on, including dozens of other key metrics worth tracking on specific campaigns. Fortunately, there are plenty of tools available to track these campaigns, especially on your website and digital ad campaigns. Google Analytics is a great tool to start with, but that's not the only tool you can use.
Also, there is some information you can't receive from Analytics tools. To fill this void, ask existing customers for feedback by offering surveys, reading online reviews, and more.
Play to Your Strengths
There's no one-size-fits-all approach to a media mix. Every brand is different and they have different strengths and weaknesses when it comes to customer acquisition. The only challenge is defining those.
For example, your product could be the primary driver of traffic, as opposed to your killer marketing strategies. In that case, utilize product-led marketing to your advantage. Assuming you are tracking metrics closely and asking for feedback, you should double down on what's working and fix what isn't.
Experience
A DIY website or advertisement simply doesn't cut it anymore, as they stand out like a sore thumb to most users. Because users are accustomed to spending their time on sites like Facebook and YouTube, there's a certain standard of quality they expect. Like it or not, that's the modern world of marketing.
Consequently, if you want to truly compete in today's business world, then you need to run effective marketing campaigns. To achieve that, you need the assistance of an experienced marketer who can help you improve your media mix.
When it comes to developing appropriate campaigns, creating captivating content, lowering your CAC, and boosting awareness, there's no substitute for a quality experience.
Lower Costs = Greater Profits
Now that you know the importance of media mix when it comes to customer acquisition, put this knowledge to use. The sooner you do, the sooner you will reap the rewards of your efforts.
Stay up to date with my latest marketing news and feel free to contact me with any questions!
Cheers,
Keegen