7 Top Customer Acquisition Challenges

Ioana Cozma
May 21, 2024
November 2, 2023

Every business faces customer acquisition challenges – yours included.

You’re on the right page to solve them.

This article:

  • Discusses seven of the most common problems in customer acquisition.
  • Explores common causes behind these issues.
  • Offers actionable advice to overcome them.
  • Shares inside stories and successful customer acquisition examples.

Keep reading to find personalized solutions to your acquisition problems.

TL;DR: Common Customer Acquisition Challenges & Solutions

  1. Inefficient Ad Spending:
  • Issue: Money wasted on ads without returns.
  • Solution: Analyze ad performance, optimize targeting, and diversify ad platforms.
  1. Poor SEO Performance:
  • Issue: Low organic traffic and visibility.
  • Solution: Revise keywords, create quality content, improve site structure, and gain backlinks.
  1. Low Website Conversion Rate:
  • Issue: Visitors aren’t converting into leads or customers.
  • Solution: Improve website design, enhance CTAs, A/B test changes, and optimize page load speeds.
  1. Leads Not Moving Through Sales Funnel:
  • Issue: Leads stagnate, causing wasted resources, low sales, increased acquisition costs, and forecasting issues.
  • Solution: Segment audience, revise content strategy, optimize landing pages, score leads, automate nurturing, gather feedback, offer incentives, run retargeting campaigns, and refine the sales funnel.
  1. Not Enough Quality Leads:
  • Issue: Marketing and sales team misalignment leads to poor lead quality.
  • Solution: Define lead qualifications, align goals/KPIs, utilize shared dashboards, establish a feedback loop, and hold regular sync-up meetings.
  1. High Customer Churn:
  • Issue: Rapid loss of customers due to various reasons, impacting the brand and investment.
  • Solution: Offer proactive support, collect feedback, launch win-back campaigns, enhance customer service, provide personalized experiences, and implement loyalty programs.
  1. Problems with Attribution:
  • Issue: Difficulty crediting marketing activities due to multiple touchpoints, offline-to-online tracking, overlapping channels, and inadequate tools.

Solution: Adopt multi-touch attribution, invest in advanced analytics, maintain unified customer profiles, employ offline tracking methods, and continuously test/optimize.

1. Difficulty of Entering New Markets

Entering new markets can bring you more ideal customers.

Or it can destroy your reputation in that new market.

There are three main problems to consider here.

1.1. Meeting Demand

Studies show that 42% of the businesses that fail yearly do so because of a lack of market demand. So, to avoid this challenge, you should first ensure your products are needed.

Here’s your step-by-step plan to improve your customer acquisition process when expanding to a new market:

  1. Identify your target audience based on demographics, psychographics, behaviors, or needs.
  2. Use primary research (surveys, interviews, focus groups) to gather firsthand information directly from potential customers.
  3. Use secondary research to analyze existing data and studies related to your market or product.
  4. Analyze your competitors to identify their unique value points.
  5. Identify an empty niche in your customers’ minds and craft your unique value proposition.
  6. Create a minimum viable product (MVP), meaning a basic version of your product showcasing its core functionality.
  7. Release the MVP to a select group of people within your target audience.
  8. Gather feedback, observe usage patterns, and understand if it truly addresses their pain points.
  9. Make improvements based on the feedback received from the pilot tests.
  10. Review market trends continually because customers’ needs and preferences fluctuate.

1.2. Not Maximizing Your Marketing Budget

Statistics show that small businesses invest just 1% of their budget in advertising.

And it’s understandable – your customer acquisition budget is already stretched thin.

However, 54% of small business owners plan to allocate more marketing costs to digital channels like social media.

So here’s the problem: You’re not using your funds wisely to communicate your offer to your potential customers.

One of the best solutions to lower customer acquisition costs is nano- and micro-influencer marketing.

Smaller influencers, up to 100, 000 followers:

  • Are highly engaged and perceived as niche experts.
  • Have direct interactions with their followers so they can specifically talk about your products.
  • Are low-cost.

Let’s say you want to advertise your fitness products with no-nonsense trainer Mitchell Little.

The estimated total cost for one post and two stories is $1, 640 to $2, 210, according to our Instagram collaboration cost calculator:

And micro-influencers have an average 2.55% conversion rate.

For Mitch, that means 2188 conversions, so your customer acquisition cost is $0.75 to $1.01.

Compare that to the average inorganic CAC, which typically has three figures.

1.3. Not Getting Enough Visibility

Influencers are a great digital marketing tool in the awareness stage because they can improve your visibility at a low marketing cost.

And we have many success stories to prove that.

For example, the beauty brand Native regularly uses influencers to address different people with different interests.

Our first campaign with them generated over 200 budget-friendly content assets from 10 influencers.

And Soylent leveraged micro-influencers to distribute their product lines based on specific interests (outdoors, hiking, gaming, etc.).

Our influencers generated 35+ reusable content assets, leading to over 5 million impressions.

But that’s not the only strategy you should consider.

Enter the omnichannel approach.

Using multiple organic and paid customer acquisition channels guarantees broader visibility and recall because you interact with your target audience across various touchpoints.

Basically, you’re always there.

Just ensure your messages aren’t spammy or pushy.

And the existing stats prove that a multi-media mix is a powerful tool:

  • 70% of customers spend more on brands with solid omnichannel plans.
  • Omnichannel approaches may increase your yearly revenue by an average of 9.5%.
  • The retention rate for omnichannel approaches is 91%.

And those stats aren’t surprising, seeing that most people use multiple devices – you don’t even need a study to attest to that.

2. Ad Fatigue [and high CPAs]

Ad fatigue is a massive problem because your target audience is continually bombarded with ads. Most of those ads look spammy because they:

  • Are poorly targeted, so they’re not interesting for the prospects they reach.
  • Focus mostly on the product and lack customer insights, so they look generic.

Side note: Many of our clients are business owners who state that ad fatigue is one of their biggest customer acquisition challenges.

Here are the best solutions to power your customer acquisition efforts.

2.1. UGC-Powered Social Media Ads

UGC is a trustworthy customer acquisition tool because your prospective customers are more likely to heed recommendations from other users.

But you need to base UGC on hard data to ensure it works. Monitor your marketing campaign performance to zero in on your best assets and then double down on them.

One insider story: We decreased CPAs for NielsenIQ’s Unroll.me app by 75% across all marketing channels.

High CPAs indicate that you’re dealing with increased competition and ad fatigue.

In this case, the inbox decluttering app faced ad fatigue because its paid assets were not reaching the right audience. We used micro-influencers who explained how the app works, thus creating awareness and desire.

This marketing strategy was built to scale, snowballing in visibility and conversions as more people started sharing user-generated content about it.

Another insider story: We decreased ad fatigue for the travel app Hopper through extensive hook testing.

Hopper addresses a young generation of budget travelers, but their TikTok ads budget was quickly running out. And their KPIs were showing increased ad fatigue.

After in-depth research, our team found that the ads needed quality hooks to keep TikTok users interested. We developed a three-hook strategy that we tested extensively to find the best-performing ones.

Here are just two examples:

As a result, we got Hopper to reach its goals both in terms of increased app downloads and in-app users.

2.2. Email Marketing

Email marketing is an excellent tool in any customer acquisition plan. And it’s a cost-effective way to fight ad fatigue because it has:

  • A higher degree of personalization: If your content is relevant, people are less likely to experience fatigue from seeing the same generic ads repeatedly.
  • Direct communication: This direct line of communication can feel more intimate, making the recipient more receptive to the content.
  • Controlled frequency: You can control how often you communicate with your email subscribers so you reduce the risk of overwhelming them.
  • Diverse content options: You can mix newsletters, educational content, product updates, stories, or customer testimonials to avoid boring your customers with promotional content.
  • User opt-in: Your recipients decided to give you their email addresses, so they showed interest in your brand. This inherent interest can make them more engaged than passive audiences exposed to unwanted ads. Plus, knowing they can unsubscribe at any time gives them more sense of control.

Plus, 72% of customers prefer to receive promotional messages through email. And 56% of marketers consider email marketing the best tool in their marketing mix for customer retention.

Side note: Ideal customer retention helps you combat the challenge of acquiring new customers because nurturing your current customers is cheaper than converting new ones.

2.3. Door Drops

Digital marketing isn’t the end-all of customer acquisition.

Door drops are good customer acquisition channels to increase leads and purchases and fight ad fatigue.

Studies show that 90% of consumers want retail-based flyers, and 45% keep them for future reference. Simultaneously, trust in advertising remains low, as 81% of respondents skip ads.

Side note: Include door drops and direct sales into your marketing mix if you have GDPR issues.

So, if you have an ecommerce website or a local business, door-drops allow you to:

  • Reach interested customers.
  • Start your acquisition campaign.
  • Generate more qualified leads.

Here’s one neat example – notice the degree of personalization and UGC used.

Source

Get the most out of your paid media with inBeat TikTok Ads Agency

3. Lack of Website Traffic

Lack of website traffic means few people know your brand, products, or services. Low exposure leads to fewer opportunities to convert visitors into customers.

And that translates into lost revenue potential.

Side note: You can’t get meaningful insights from analytics without substantial traffic because a small sample size can skew results. That makes it difficult to understand your customer acquisition KPIs and derive useful solutions.

Here are some solutions to improve website traffic:

  • On-page Search Engine Optimization (SEO): Identify potential SEO issues using tools like Ahrefs, SEMrush, and Google Analytics. Optimize your website for search engines to improve organic rankings. This includes keyword research, quality content marketing strategy, relevant content creation, meta-tag optimization, and building quality backlinks.
  • Technical SEO: Ensure your website is optimized for user experience, speed, desktop, and mobile-friendliness. You aim to offer your ideal customers a positive experience while alleviating privacy concerns. Thus, integrating robust healthcare, e-commerce, or legal website design principles is pivotal for boosting your site’s technical SEO, enhancing the user experience, and signaling to search engines that your site is a credible and authoritative source of information.
  • Off-page SEO: Write guest posts for reputable websites in your industry. This can expose your brand to a broader audience and drive traffic back to your site.
  • Pay-per-click (PPC) advertising: Invest in paid search campaigns on platforms like Google Ads to generate immediate traffic.
  • Influencer marketing tactics: Partner with influencers in your niche to tap into their online audience and direct them to your website.
  • Referral programs: These programs harness the power of word-of-mouth marketing and thus get more quality leads in your customer acquisition funnel. And they’re more likely to purchase your products because they trust recommendations from their loved ones (your loyal current clients).

4. Leads Not Moving Through Sales Funnel

Leads not progressing through the sales funnel is a significant challenge in your customer acquisition strategy because it translates into:

  • Wasted resources: You invest time, effort, and money in attracting and nurturing these leads. And if your marketing efforts don’t show results, you can say these resources are wasted.
  • Stagnant sales: A bottleneck in the sales funnel entails lower sales and revenue.
  • Increased customer acquisition cost (CAC): When leads don’t convert to paying customers, the cost of acquiring each successful customer rises.
  • Missed opportunities: Each lead that doesn’t convert is a potential customer lost, along with their potential customer lifetime value and any personal referrals they might have made.
  • Difficulty in forecasting: If leads are unpredictable in their movement through the funnel, forecasting sales and revenue is also unpredictable. That means you don’t have useful data to base your marketing strategies on.

Here are some solutions to address leads stagnating in your sales funnel:

  • Practice audience segmentation: Segment your leads based on their behavior, demographics, and interests. Customer segments allow you to create customized messaging that pushes them further down the funnel.
  • Reassess your content marketing strategy: Ensure that the content you create for each stage of the funnel aligns with the lead’s current needs and pain points. Review your keyword strategy, too.
  • Optimize landing pages: Ensure that landing pages are clear, concise, and have compelling calls to action. Creative testing can help identify which elements work best.
  • Practice lead scoring: Rank leads based on how likely they are to convert. Focus more effort on high-scoring leads while re-engaging or re-nurturing lower-scoring ones.
  • Automate nurturing: Use marketing automation tools to send timely and relevant messages to your leads. This constant and customized communication nudges them to the next stage.
  • Use a feedback mechanism: Engage with stagnant leads to understand their reservations or concerns.
  • Offer incentives: Sometimes, providing limited-time discounts, bonuses, or additional value can motivate leads to take the next step in the customer acquisition funnel.
  • Retargeting campaigns: Use retargeting ads to re-engage leads who have shown interest but haven’t taken further action.
  • Review and adjust the sales funnel: Don’t try to fix the entire customer journey. Instead, identify bottlenecks or stages where leads tend to drop off, analyzing specific customer acquisition metrics for these stages.

Side note: Some of these solutions may sound too generic for your unique challenges. A free strategy call with inBeat can help you gain more clarity on your needs and specific solutions.

Let’s invent a customer acquisition example.

Let’s say you discover that leads drop off after the initial sign-up but before attending a scheduled product demo.

This indicates that while there’s interest in the product (as shown by the sign-up), there’s a disconnect or lack of motivation to take the next step.

You may improve your customer acquisition efforts if you:

  • Enhance email communication: Sometimes leads forget about the demo, so send them automated reminders and the option to reschedule. Alternatively, enhance your email content by highlighting other valuable benefits.
  • Engage leads with pre-demo content: Before the full product demo, send leads a short introductory video about the product to build excitement and curiosity. You can also share success stories or engage marketing-qualified leads with interactive content like quizzes.
  • Optimize the scheduling process: Offer multiple time slots for demos and send email confirmation immediately after people schedule.
  • Implement a feedback loop: If a lead skips the demo, follow up with a short survey or feedback form to understand their reasons. That’s how you get valuable insights and make improvements for future leads.

5. Not Enough Quality Leads

Not getting enough quality leads reduces your sales efficiency and increases customer acquisition. You can’t have sustainable growth without them.

The main reason is siloed marketing and sales teams.

Misalignment between sales and marketing teams can mean that marketing generates leads that sales find unqualified or not ready for conversion.

Improving communication between internal teams is a basis and key pillar of any successful customer acquisition strategy.

  • Shared definition: Both teams should agree on the definition of marketing-qualified leads (MQLs) and sales-qualified leads (SQLs). Also, develop a lead scoring system where both marketing and sales teams contribute to defining the criteria.
  • Unified goals and KPIs: This alignment ensures that both teams are working in tandem towards the same organizational objectives throughout the entire customer journey.
  • Shared dashboards: These allow both teams to view real-time data on MQLs and SQLs. This transparency ensures everyone is on the same page regarding lead quality and volume.
  • Feedback loop: A solid structured feedback mechanism allows sales to provide insights into the quality of leads they receive. This feedback helps marketing teams refine their strategies and targeting to bring in more SQLs.
  • Regular sync-up meetings: Organize meetings between marketing and sales teams regularly. That way, they can discuss lead quality, potential issues, and solutions. Also, organize workshops and training sessions where both teams participate.

6. High Customer Churn

Customer churn defines the rate at which you lose customers during a specified period of time.

A high churn means losing the investment you made in acquiring those customers. And you’re losing it fast.

Plus, this can damage your brand’s reputation, making it harder to attract new customers.

Reasons for high customer churn include:

  • Inadequate product/service quality
  • Poor customer experience
  • Ineffective customer service
  • Mismatched marketing messages
  • Better alternatives, especially if you fight a high level of competition
  • Lack of engagement leading

To solve this problem, focus on the causes above and consider:

  • Proactive customer support: Instead of waiting for customers to report issues, use predictive analytics or monitoring tools to identify and address potential problems proactively.
  • Gather feedback: Surveys, feedback forms, or direct interactions can provide insights into why customers might be leaving.
  • Win-back campaigns: Reach out to churned customers with personalized messages and special offers, addressing their reasons for leaving and enticing them to return.
  • Enhance customer service: Ensure that customer service representatives are well-trained and have all the necessary tools to solve issues promptly. Implement live chat for real-time support.
  • Offer personalized experiences: Use data analytics to understand individual customer preferences and tailor experiences based on their behaviors and needs.
  • Loyalty programs: Implement loyalty or rewards programs that offer benefits for loyal customers. This can incentivize your customer base to stick around.

Here’s an excellent win-back campaign from Dinnerly:

Source

Notice the contrite question below the image. Also, Dinnerly used inside data showing the last time the mail recipient cooked with them. That’s a top-notch level of personalization.

The email also showcases specific benefits, a quick way to reactivate the account, plus a $10 voucher code.

7. Problems with Attribution

You need to measure your customer acquisition correctly. Otherwise, you won’t have solid data to base your future business decisions on. That means you might misallocate resources, thus creating inefficient campaigns with higher acquisition costs.

Enter attribution.

Attribution refers to understanding and crediting specific marketing activities or touchpoints that lead a customer towards a desired action, like making a purchase.

Proper attribution informs marketers where to invest their time and money for optimal results.

Your problems with attributions might be caused by:

  • Multiple touchpoints: When you have several touchpoints across various channels, it’s difficult to determine which was most influential.
  • Offline to online interactions: Some customer interactions might start offline (like seeing a billboard) and then move online, so tracking is even more challenging.
  • Overlapping channels: Customers might see ads on social media, click on a PPC ad, and read a blog post before converting, leading to confusion about which channel gets the credit.
  • Limited tools: You may only have basic analytics tools, which offer few insights into complex customer journeys. That’s why partnering with a customer acquisition agency like inBeat can save the day.
  • Short-sighted attribution models: Models like ‘last-click attribution’ oversimplify the journey, only crediting the last touchpoint before conversion.

Let’s review some actionable advice to solve attribution problems:

  • Adopt multi-touch attribution: Multi-touch attribution doesn’t give credit to one channel. It distributes it among all touchpoints a customer interacts with on their buyer journey. This offers a more holistic view of the customer’s path to conversion.
  • Use advanced analytics tools: Invest in advanced mobile attribution platforms that track and analyze multiple channels, touchpoints, and customer interactions. Good examples include Google Analytics, AppsFlyer, Branch, and Adjust.
  • Unified customer profiles: These profiles consolidate data from various touchpoints so you can track an individual’s entire interaction history with your brand.
  • Offline tracking methods: Use unique promo codes, dedicated phone lines, or QR codes for offline campaigns.
  • Test and optimize: Constantly test different campaigns and channels to see which ones perform best in terms of attribution and adjust strategies accordingly.

Which Customer Acquisition Challenges Are You Facing?

This guide took you through seven common customer acquisition challenges.

You now know practical strategies and tools to solve them, with plenty of successful examples to draw inspiration from.

Although we tried to keep everything as actionable as possible, each company faces specific challenges.

Therefore, some of these strategies can be hard to customize for your needs.

inBeat can help you with a data-driven approach.

We’ll analyze your market situation, target audience, and competitors to create bespoke results-oriented solutions. Let’s schedule a free strategy call, and we’ll get you a solid customer acquisition plan to overcome your challenges.

Want more examples of successful influencer marketing strategies? Check out our case studies.

Want more examples of successful UGC campaigns? Check out case studies of our performance-based UGC agency!

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