Marketers use many tools, strategies, and tactics to help grow their customers’ businesses. But the first step is to decide where to invest your money to promote your brand. It may involve reducing customer churn, growing market share, and more. However, for most modern companies, the most relevant are customer acquisition challenges.
In the overview below, we will consider the most common difficulties companies may face in attracting new customers and try to solve them. Our professional agency specialises in advertising and digital marketing. Over the years, we have helped many clients grow their customers and popularise their brands by using the most effective tools and optimising their campaign budgets.
The Importance Of Customer Acquisition
If a company doesn’t have new customers, it will eventually stop. Modern businesses cannot thrive or survive by focusing solely on existing customers. Finding potential customers and further turning these people into regular customers is very important for the vitality of modern business. But in this situation, there are customer acquisition challenges, because the preferences and behaviour of modern consumers are changing. It is also necessary to use appropriate techniques and tools to achieve success in this matter.
Attracting new customers is 5-25 times more expensive for modern companies than retaining the existing customer base. Over the past few years, various studies have also proven that a company’s ability to retain customers and the size of its revenue are closely linked. You must learn how to retain customers to expand a company’s success. It is important for several reasons:
- Affordability costs 6-7 times less to retain an existing customer base than attracting a new one.
- Recommendations to other potential customers — a satisfied, loyal customer is more likely to praise your company to others; they become full-fledged brand ambassadors, allowing you to attract more consumers.
- Increased revenue — Harvard Business School conducted a study that proved that increasing customer retention rates by 5% can increase profits by 25-95%.
- Rapid growth in sales — loyal customers are more loyal to the brand. At the same time, they start spending more money on purchases, and there is also a high probability that customers will buy new products or the company’s services.
That being said, customer retention is influenced by several factors. Many business owners are interested in why some customers leave while others remain committed to the brand for a long time. The reason for this can be many subjective and objective factors. They all decide potential customers’ decisions on purchasing, and customer retention also deteriorates.
To a large extent, the customer retention rate depends on the sphere of activity and the company’s scale. The most important factors that affect customer retention can be attributed to the following:
- The level of customer service of the company
- Quality of service and support provided
- Level of product quality and pricing policy of goods/services
- Competitor pricing and the difficulty of switching to another company
- The extent of personalisation of your interaction with your company’s customers.
Most often, to understand the cause of customer churn, you need to conduct an advertising audit, which real professionals of our marketing agency will handle. We will conduct a detailed study of your business to find the problem and suggest the most effective solutions.
10 Problems of Customer Acquisition
Customer acquisition problems are acute at the moment. Attracting and retaining customers requires time, resources, money, and strategic changes in your company’s activities. But the result is well worth it. Loyal repeat customers have a higher lifetime value and bring excellent profits to a company.
Therefore, modern brands should build and maintain optimal long-term customer relationships. They should also provide high-quality service and guarantee a personalised experience. Using customer loyalty incentives will also be a very effective solution. For customers to trust you, you need to ensure the high competitiveness of your products/services. You should not forget to increase the satisfaction of the company’s employees. In the long run, this will improve customer retention.
Below, we have gathered the main customer acquisition problems and suggest effective solutions.
1. Limited Marketing Budget Challenges
Statistics show that small businesses invest at most 1% of their budget in advertising. It is quite natural that a limited budget harms customer acquisition. At the same time, 54% of small business owners soon plan to direct more marketing spending towards using digital channels (social media) to attract customers.
The main problem with a small budget is that you’re using your already limited funds wisely to communicate your business proposition effectively to potential customers.
How to solve this problem: use micro-influencer marketing to reduce CAC. In practice, it is proven that the best solution to reduce customer acquisition costs is microtargeting by engaging influencers. The advantage of this solution to the problem is that less influential public figures (who have less than 100,000 followers on a social network):
- Have lower advertising rates for brands;
- are perceived by their target audience as highly specialised experts;
- interact directly with their followers so that they can discuss your product or service.
Of course, it is worth researching the niche in detail beforehand to find influential Influencers who can be trusted to promote your product. You can promote to several influencers at the same time.
2. Growing Demand for Innovation in Technology
The crux of the problem is that competitors and app aggregators are using artificial intelligence. Many companies also face the problem that almost everything they work on is quickly going out of style and becoming irrelevant.
Keeping up with the ever-changing environment takes a lot of work. At the same time, businesses will have to face the fact that change entails additional financial costs and changes to existing processes. Meeting the demand in this matter is one of the most important challenges. Studies have shown that about 42% of the companies that face failure daily have to overcome problems because there is no fulfilment of demand in the market. To insulate yourself from this problem, you must ensure that your products are in demand among today’s consumers.
How to solve this problem: optimise your customer acquisition process to meet the demand. In this case, you should follow the following plan:
- Determine what your target audience is. It can be done using demographics, behavioural patterns or customer needs.
- Use primary research data (survey results, interview material, focus groups) to gather information from a primary source – directly from the customer.
- Examine secondary research to analyse existing data and analysis that relates to your product/service.
- Research your direct competitors to find out their unique advantages.
- Find an empty niche in the minds of your target audience and create your unique value proposition.
- Develop an MVP (minimum viable product) – this is a basic version of your product with basic features.
- Demonstrate your minimum viable product to a select group of your total target audience.
- Study customer feedback and what they think of your product. Based on this data, determine whether your product solves their problems and has weaknesses.
- Implement changes based on what was learnt from the feedback left during the pilot testing of the product.
- Stay current with new market trends, as the needs of today’s consumers are constantly changing.
3. Difficulty in Making a Strong First Impression
The incentive for someone to test your product or service is based on whether you can create a positive perception of your selling proposition. Proper marketing is the key to solving your problem. Your selling proposition must be relevant and interesting for your target audience to consider buying or using your service seriously.
In this case, attracting customers may become more difficult because your company is not visible enough online. Even if you have put enough effort into search engine optimisation and filled your social media pages with quality content, your brand will not necessarily become visible.
In this situation, there are different ways to solve the problem of customer acquisition:
- Use influencers’ help to attract attention and create a positive first impression of your product. In this case, the smartest solution is to use influencers’ services. This is a very effective digital marketing tool for increasing awareness, as Influencers can achieve great results at minimal cost.
- Multichannel approach for maximum reach. You can utilise multiple organic and paid channels to engage your target audience, increase memorability, and ensure wide visibility. This is because you will engage with your target audience through different touchpoints. In essence, your brand will always stay close to the customer. But it is worth ensuring your messages are not intrusive and will not be considered spam.
It may also seem too trivial at this stage, but you should ensure you know your target audience well. It is fundamental. You need to identify your customers’ needs and what they want, find their fears and tailor your offer based on that. When visiting your website, their first impression should be: ‘Yes, this is for me!’.
4. Increasing Expectations for Personalised Marketing and Sales
Your customers should receive what they see in your company’s advertisements. It applies to many aspects: visuals, quality of service, and more. If they don’t, your customers will become your competitors’ customers much faster than you might think.
A well-thought-out and coordinated approach ensures you attract more customers and get the right brand perception. Each team must work together to welcome and serve valuable customers when they want to buy something from you. Please coordinate the marketing and sales teams to ensure your customer acquisition efforts exceed expectations.
Marketing and sales departments are most often separate. But in reality, they are very much dependent on each other. Marketing is required to increase brand awareness and improve the attraction of new customers. But it is worth noting that the sales department is responsible for closing deals with customers. If your company has an effective sales team but no great marketing team, you may expect a small flow of customers from the start. If the situation is reversed, you will attract many customers, but it will all be for nought if your sales reps perform differently than they should.
You need to clearly understand the responsibilities of the marketing and sales teams, as well as their limitations. It is necessary to understand the way they work. You can’t blame your sales staff for poor-quality leads. Neither can you blame the marketing team for not making the profit you are making. Sometimes, the main problem appears because of incorrect KPIs. They can cause your company’s specialists to lose sight of the real goals. It can also happen that these 2 departments need to match their offer to consumers. Therefore, potential customers end up feeling that they are just being cheated when their promises remain unfulfilled.
The situation can be even worse if the sales and marketing departments are combined. It is definitely worth realising that these departments have completely different goals and responsibilities. Combining them will only lead to more confusion. Also, a lot will be overlooked, adding even more problems. In addition, if the head of the new department favours marketing, ignoring sales, or vice versa, it is immediately clear what problems will arise.
To improve customer engagement, you must examine how and whether your marketing and sales teams work together. If they are completely unaware of what is happening in the other department and have serious communication difficulties, then you have a problem that must be addressed immediately.
Solving the problem of customer acquisition in this situation depends on what kind of difficulties you are facing:
- Different goals. Often the marketing and sales departments have completely different goals and different metrics. It leads to uncoordinated actions and missed opportunities. Marketing may focus on how to get customers’ attention, while what matters to the sales department is the number of deals closed. In this case, a disconnect is created. To solve the problem, you need to set common goals and metrics for 2 different teams to arrive at. You can use a lead scoring system to prioritise your leads. Regular departmental meetings are also worth aligning strategies and keeping them on track.
- Lack of communication. If there’s no sensible communication between the sales and marketing departments, it leads to problems. If the teams are isolated, valuable ideas and feedback are lost. To solve this problem, it’s worth improving communication with a variety of collaboration tools: Slack or Microsoft Teams. Set up regular feedback where both teams can share ideas and resolve issues.
- Different tools and platforms. Marketing and sales departments use disparate technologies. It provokes more problems and misunderstandings. As a result, there can be no unified view of interacting with customers. You can implement integrated CRM and marketing automation tools to solve the problem in this situation. This way, you can create a true view of properly interacting with your target audience. To bridge the gap between the marketing and sales departments, it’s worth using platforms like Salesforce and HubSpot. In doing so, each team should have access to the same information. It will greatly increase efficiency.
5. Customers Seek Greater Value at Lower Costs
Customers’ needs are always changing. They want to get more but spend less. Modern consumers correlate the benefits of a product/service with its pricing. Customers are more likely to purchase if they believe the offer has more value than the price they have to pay. To create a positive perception of value, it is worth paying attention to several important factors:
- The quality of the product presented
- Uniqueness
- Characteristics
- Brand reputation
- The level of customer service.
The expectations of today’s consumers are higher than ever. They demand personalised, fast and seamless experiences at every stage of their brand interactions. That’s why it takes time for companies to meet expectations and stay afloat. Some of the biggest challenges include the following:
- Personalisation. Consumers expect a brand to understand their needs, wants, and tastes. They want to feel that the company cares specifically about them. To solve this problem, you need to use information about your customers to develop personalised marketing campaigns. CRM systems and data analytics will monitor customer interactions and preferences to ensure the most personalised experience possible.
- Demand for speed. Today’s consumers want instant gratification. For this reason, quick response and responsive service have become the norm. This customer demand extends to all customer service channels, from social media pages to live chat on a website. If a response is given after a long time, the customer may become disillusioned with the brand and lose the opportunity. To solve this problem, it’s worth using chatbots or AI to give lightning-fast answers to the most common customer questions. It’s also worth considering optimising your customer service team to resolve issues quickly.
- A top-notch multichannel experience. Customers want a great experience on every channel, regardless of exactly how they interact with a brand: online on a website, in a physical shop, or on a mobile app. If the level of service isn’t consistent across channels, it can lead to customer frustration and them leaving you for your competitors. To solve this problem, it’s worth integrating marketing and sales departments to harmonise the customer experience across the different channels supported.
6. Rising Customer Acquisition Costs
Everyone has a cost, and this also applies to acquiring new customers for your company. The cost of acquiring new customers constantly increases on certain digital channels and platforms because competition is constantly growing, and audiences need to be more receptive to messages.
It is quite a big challenge for modern companies. We suggest to consider the main difficulties and effective ways to solve them:
- Rising advertising costs. The financial costs of digital advertising are constantly increasing. Popular worldwide platforms Google and Facebook regularly update their algorithms. Therefore, the cost of reaching the target audience is constantly increasing. This fact leads to the fact that companies’ marketing budgets are gradually depleted, which affects the overall return on investment reduction. To solve this problem, it is necessary to optimise the marketing budget by diversifying advertising channels. It’s worth using a combination of SEO, social media, content marketing and PPC advertising to spread the risk and reduce costs. Periodically analyse the performance of each channel to allocate your advertising budget properly.
- Exaggerated customer expectations. Modern consumers demand maximum personalisation and quick responses. All this leads to the fact that your costs will increase. You often need to use sophisticated tools and additional resources to meet these expectations. Therefore, the number of costs only increases. To solve this problem, it’s worth using data analytics and marketing automation tools to provide customers with a quality, personalised experience. You can use tools like HubSpot or Marketo, among many others, to optimise your marketing processes. With their help, you can reduce your costs by intelligently automating repetitive tasks.
- Retaining customers rather than attracting new ones. If you only focus on attracting new customers rather than retaining the ones you already have, that can drive up your costs. Attracting new customers is important. However, it is often more expensive when compared to retaining the existing customer base. The best solution is to strike the right balance between attracting new customers and retaining existing ones. You can implement loyalty programmes and engage with current customers to reduce customer churn and increase their lifetime value. Satisfied customers will recommend your company to others, thus reducing your budget for attracting new ones.
7. Higher Expectations for Customer Service
Customer acquisition is directly related to customer service expectations. It affects how potential customers perceive a brand’s commitment to meeting their needs and solving problems quickly. If your company meets or exceeds expectations, it will positively impact your brand reputation. It will also increase trust and the likelihood that you will be recommended to others, attracting even more customers.
Transparency of service and speed of response demonstrates respect for the customer, the brand’s concern for consumers, and the fact that it values the customer’s time. All of this builds a positive customer experience. At this point, you could call it the new standard: transparent cooperation. Otherwise, customers can always move on to competitors who offer more favourable terms of cooperation and care more about consumers.
To solve this problem, it is worth using the following effective solutions:
- Proactive support of your customers. You should not wait for your customer to inform you about problems. It’s best to use predictive analytics or monitoring tools to find and fix potential problems before customers report them themselves.
- Study feedback. To understand exactly what your customers want, conduct and study surveys regularly, read feedback forms, or you can influence customers directly.
- Improve your company’s customer service. Ensure that your company’s customer support staff has all the necessary training and the required tools to solve the user’s problem promptly and efficiently. Implementing live chat to communicate with the support team is also a very effective solution.
- Provide a personalised experience. Use data analytics to understand customer needs and tailor the experience based on the information gathered.
- Develop a loyalty programme. You can implement a rewards or loyalty programme to give your loyal customers exclusive benefits. This way, you will motivate customers to stay with you.
8. You Need to be Patient
We understand that you need results as fast as possible. It makes sense that a business owner needs to understand whether to invest further in a customer acquisition strategy or whether something needs to change. Results are required to ensure you are on the right track and not wasting time and money. But you can only realise the fidelity of your actions after some time. You should be patient.
It is not worth cutting down the project because it did not give the result within a week. You should be patient so that the chosen channel of attracting customers blossoms and gives the desired result before making certain conclusions. You shouldn’t fantasise about sudden success. Here’s some rough data for you:
- Instagram – to gain 100,000 subscribers, you will have to wait an average of 18 months.
- SEO – you’ll see results in about 6-12 months.
- YouTube channel – to get 1000+ subscribers, you should post videos regularly for at least 1 year.
It is also worth remembering that everything is individual for each project, and you should not take the above data for the truth. To achieve the desired result, you should make consistent and regular publications on the chosen platform.
In addition, the above figures apply to freelancers and Influencers. Users are more actively subscribing to other people rather than brands, so companies should wait longer.
It’s also worth remembering one important point: growing an audience is one thing, but turning subscribers into real paying customers is another. Growing your audience is not enough. You need to work further.
9. Difficulties of Automating Processes
Having too many tools is a hindrance, as is not having them. Relying solely on your Excel skills, while undoubtedly an impressive solution, is no longer sufficient in several situations:
- When your company grows to the point where you need help keeping track of everything on your own.
- Your tasks and responsibilities will leave you little time for micromanagement.
At one point, when you care about growth, you will have to take advantage of modern technology to automate and optimise some of your work. The sooner you recognise this, the better the tasks. In business, many repetitive, boring tasks need to be done, but they are not a strict part of your business. If something can be optimised and automated, do it.
Modern software opens up a lot of possibilities. This way, you can create the most efficient communication channels with your customers. In doing so, you will optimise processes and prepare templates for documents in advance, create email templates and much more.
This way, you’ll be able to demonstrate your professionalism to your customers. They will receive a great personalised customer experience through the fastest possible response to any problem and well-crafted documents. It will significantly improve the reputation of your company. Customers will think they are working with professionals and in good hands. It will not satisfy the client if they get the answer, ‘We can probably discuss it next week’. If, on the other hand, you lay out each step for them with specific points and deadlines, it inspires confidence.
10. Focusing Only on Important Tools
Rapidly evolving technology is both exciting and frightening. People don’t want to be left behind, so they seize every opportunity, grabbing onto trends that haven’t quite curled up yet, thinking that this decision will pay off in the future. Crypto, NFT and more – interested people are doing their best to stay ahead.
That said, getting excited about something new and shiny can be easy, a new tool that can be rampantly marketed. Particularly if the product has some pretty aggressive marketing, ‘Your business simply can’t survive without this tool’ or ‘Every single one of your competitors already has this.’ It has the potential to cause stress for any business owner.
Unfortunately, the more you fall for these tricks, the more dire a position you may find yourself in in the future. By using an excessive number of tools, you ensure that information is spread across many different platforms. It leads to many errors if you don’t check the relevant documents. If it comes to small businesses, you can get by with little blood. In the case of large companies, it can be a real disaster.
In addition, updating numerous tools will be problematic if something changes in your company (maybe new customer data and so on). In this case, it is even more likely that you will need to remember to update something.
Also, using too many tools confuses your employees (especially those who will be hired later) and requires clarification. If each specialist refers to different documents and prefers to work on a completely different platform, it will provoke even more problems.
The fewer tools you have, the better for your business. This will reduce the cost of attracting new clients and minimise errors and other problems. It also indirectly affects service—the quality of customer service is improved.
FAQ
What are the 3 major challenges in customer relationship management?
Every year the importance of customer relationship management becomes more and more important. It is an integral part of any successful business. Over 80% of industry leaders worldwide use CRM to retain and attract customers, provide the best customer service and build stronger customer relationships. However, many companies face 3 major challenges in achieving meaningful results from their CRM investments: ensuring data quality, driving user adoption, and integrating CRM with existing systems.
What are the challenges faced in customer care?
Quality customer care is critical to business. Statistics show that today’s consumers are 5.1 times more likely to recommend a business to others after excellent customer service. It means that customer satisfaction, company reputation, brand growth and development directly depend on the quality of customer support provided.
During customer service, several problems are most often encountered: serving multiple customers simultaneously, not knowing the answer to a question, dealing with frustrated customers, failing to meet customer expectations, not being able to solve a problem quickly, not having the right tools and others.
What are the 4 C’s of customer relationship management?
To succeed in business, there are many components that need to be considered. One of the most important is customer service. This area has evolved rapidly over the past few years, including through digital innovation. To stand out from the competition, a company should incorporate the 4Cs. It has several dimensions: customer experience, communication, content and collaboration. Every company should consider the 4Cs as the pillars by which they manage to keep the customer experience top of mind. In today’s business, you can only have one of the 4 P’s with the other.
What are the 4 P’s of customer engagement?
The art of delighting your customers is an essential skill that will help take your business to a whole new level. The standard 4Ps are the key components that have proven to be a great customer engagement strategy: people, personalisation, proactivity and responsiveness.
What is poor customer retention?
At the most basic level, customer retention is a brand’s ability to keep its customers for a specific period. It refers to a business using various techniques to build long-term customer relationships. It also includes encouraging customers to make repeat purchases and preventing them from switching to competing companies. Effective customer retention strategies focus specifically on retaining existing brand-loyal customers and maximising the customer’s lifetime value. Most often, this involves customer loyalty initiatives.
Accordingly, poor customer retention is when customers do not favour your company, do not make repeat purchases and leave for competitors.
