It might be obvious, but for most businesses, the key to growth is: gaining more customers.
Put another way, large businesses are large because they have large customer bases.
Despite this obvious truth, we see a lot of smaller businesses without a well-defined acquisition and growth strategy. From what we’ve seen so far, it’s the exception.
Perhaps this is partly the fault of those in marketing.
Some years ago, the focus within marketing circles was to increase customer loyalty. That is, convincing existing customers to purchase more frequently and to fall in love with the brand.
Over the last decade, this has steadily given way to the realisation that there’s no way to avoid growing the size of a customer base in order to achieve lasting and significant sales growth.(1)
The same is true for small businesses.
The realities of customer acquisition for a small business
For any business, acquiring new customers is typically hard work.
There can be a lot of up-front costs involved. Profit payback often comes long after expenditures have been made and cash flow has been reduced.
Furthermore, it’s not obvious which mix of channels and tactics is most effective. It can all sound a little risky.
But there are smaller businesses out there who are growing their revenue because they are proactive with their acquisition efforts, despite not having large budgets to work with.
They have the same pressures on their time as other owners, but they’ve set aside time and budget so they can develop their presence in the market.
If they are short on time but have budget, they use the help of others.
For instance, the owner of a car garage in North Wales said to us:
We reviewed a sample of small businesses and here’s what we found
On the other end of scale from the example above, we’ve seen many more small businesses leave customer acquisition — which is precisely their means of growing revenue and achieving financial goals — to either chance or their customers.
Take the following example.
We worked with one owner and found that most existing customers had found the business through positive word-of-mouth from other customers.
Hardly anyone mentioned advertising or even social media.
Now, this reflects well on the quality of service, but poor from a growth perspective — the business wasn’t growing and customers either weren’t reached by any promotional activities or didn’t notice them.
The fact that customers loved the service and are telling others about it is an example of a business that has the right fundamentals and has the potential to grow.
But there’s hardly a business which can avoid the obvious truth: to grow, you need a larger customer base. And to do that, you need a well-defined customer acquisition strategy. In other words, a plan of how to get new customers.
To look at this issue further, we spoke to seven other small businesses in the North Wales and Chester area to see what marketing channels they were using to generate and capture interest:
- Cosmetics and treatments business
To generate interest: Facebook, Instagram and PR
To capture interest: website - Restaurant
To generate interest: Facebook and Instagram
To capture interest: website and a mobile app to collect orders and process payments - Martial arts and fitness centre
To generate interest: Facebook and Instagram - Independent hotel
To generate interest: Facebook and Twitter/X
To capture interest: website (to take bookings and process payments) and Booking.com - Pizzeria
To generate interest: Facebook
To capture interest: website - Car garage
To generate interest: Facebook, Instagram, and printed adverts in local magazines
To capture interest: website - Driving instructor
To generate interest: Facebook and Instagram, but not a big focus as they had a full order book
We then asked similar questions in online business groups and put all the findings together. In summary:
- Facebook and Instagram are the primary channels used by small businesses to generate interest: however, this was limited to organic posting and didn’t include paid ads;
- Websites are the primary channel to capture interest and convert enquirers into customers: but the websites rarely have an e-commerce or order-capture element;
- A lack of creativity in the channels and media being used: despite the businesses being from different industries, the same channels are being used over and over. Other potential channels didn’t come up, e.g. print, radio, Google ads or even email marketing.
You’ll naturally gain customers, but it may not be enough
If you serve your customers well, they’ll often say good things about you in conversation with other people, without you asking or spending a pound (like in the previous example).
You’ll also experience a natural degree of loyalty: customers will often choose to purchase the same group of brands and services.(2)
The problem is, this is rarely enough to hit financial desires. And, as we said before, from what we’ve seen so far, an acquisition strategy is the exception for small businesses.
So, assuming you can’t rely on natural customer loyalty and word-of-mouth alone to meet your aspirations, we’d like to offer a number of recommendations.
Our recommendations to small businesses to acquire more customers
Strategy first. Tactics later
If you take away one thing about this article, let it be this:
When thinking about how best to acquire customers, the first step is to put tactics out of your mind. Forget Facebook, Google ads, ChatGPT or anything else. Without a good strategy, the chances are, any time or money spent on tactics will be spent in the wrong areas.
Instead, step away from the day-to-day running of your business and put yourself in the position of a prospective customer. Better still, survey them.
Then try to objectively answer this question: what do they know about your business and how strongly do you match their needs and desires according to them?
It can be a humbling experience.
Perhaps they know little and care even less (if this is the case, you are not alone).
Perhaps they’ve heard of you, considered purchasing but got side-tracked by another option.
But whatever the reality, you have to start with real-life observations and an objective frame of mind.
This can be difficult when you are so close to your business. But once you have orientated yourself, you’ll ideally need to carry out research that will help you build a strategy, such as:
- What are the main purchase options and buying patterns in the market? And where does my business fit into these options?
- Which set of prospects are my best targets?
- How can I position my business in the market, so the target audience knows who I am and what I stand for?
- How can I reach the target audience?
- What should I say to the target audience when I reach them?
Think about your customers, not your competitors
Don’t worry about what your competitors are doing too much — look at your customers more.
It can be tempting to think that the grass is greener on the other side and our competitors have got the answers.
But don’t assume the channels used by your competitors are necessarily your best option.
As we saw above, businesses of different kinds are typically using the same marketing channels and tactics. This is likely due to making assumptions about how best to reach the market at a low cost.
Instead, gain a deep understanding of your customers — what they do, why they do it, what their needs and desires are and what options they consider in a buying situation.
This will provide more strategic direction to you than treading the same ground as your competitors.
A sports and gym centre we spoke to — and a brilliantly marketed one at that — summed up this attitude well:
Get your brand in order before spending money on acquisition media
As part of your strategy, we recommend assessing some fundamentals before spending money on advertising, PR, or any other acquisition media.
You need to know the marketing pounds you spend are helping to build a brand that is recognisable and distinctive to your target audience. If it’s hard for prospects to remember you in a buying situation, you’re on the back foot.
Whether this is the case or not should come out in the research during the strategy stage.
While we’re on the subject of getting prepared before committing to media spend, ask yourself: can I actually handle more enquiries and customers, and still provide a good experience? Does the website work — does it appear in a Google search, does it load quickly, can the user find what they need and does it work all the way through to order completion?
You’ll usually find there is some groundwork to do beforehand.
Start small, and be prepared to change along the way
Running an acquisition campaign will not necessarily mean committing to a large spend. You can typically do it in stages. In fact, it’s better because you can change one thing at a time and see what happens.
You also get to spread your costs and sequence your activities into manageable amounts. You may not benefit from economies of scale — this will come later — but it’s often better to make smaller steps than dive in straight into the deep end.
It does mean that you’ll need to decide on a measurement framework so that when you run a marketing activity you’ll have the means to assess whether it had a positive impact or not.
Sometimes this can be hard numbers, such as website stats, or softer measures such as conversations to gauge a change in perception about your brand.
Not only is acquisition a marathon and not a sprint, but it’s a marathon that never ends.
We’re here if you need a helping hand or second opinion
If you’ve read this far and are interested in increasing the size of your customer base, please feel free to reach out to us to discuss your goals. We’d be happy to give you our thoughts, well ahead of any discussion on commitments.
Reference and notes
- The re-focus on acquisition has been largely driven by Prof Bryon Sharp of the Ehrenberg-Bass Institute for Marketing Science in Australia and his seminal book, How Brands Grow
- See “Brand loyalty – a natural part of buying behaviour” in How Brands Grow by Prof Byron Sharp