Want to know the best way to acquire new customers in 2024?
Here’s our complete guide to developing a winning customer acquisition process…
- What is Customer Acquisition?
- What are the Most Important Customer Acquisition Metrics?
- What is the Best Way to Acquire Customers Online?
- The Top 3 Value Ladder Sales Funnel Variations
- How to Build a Squeeze Page Funnel For Your Business
- How to Drive Traffic to Your Squeeze Page Funnel
- Build Your Squeeze Page Funnel In Just Five Days!
What is Customer Acquisition?
Customer acquisition is the process of converting people in your target audience into paying customers.
When it comes to acquiring customers online, there are two ways you can go about it:
- Converting visitors into customers directly by driving traffic straight to your company’s website or your sales page.
- Converting visitors into leads and then into paying customers. You can do that by driving traffic to your lead magnet landing page, collecting potential customers’ email addresses, and then selling them your product or service via email.
The latter approach tends to be much more effective. In fact, according to our data, on average, sales funnels generate 6x more sales than websites. That’s why in this article we are going to focus on acquiring customers with the Value Ladder sales funnel!
What are the Most Important Customer Acquisition Metrics?
Now let’s discuss the most important customer acquisition metrics.
Customer Acquisition Cost (CAC)
The most important customer acquisition metric is customer acquisition cost (CAC). It shows how much money on average it costs you to acquire a new customer.
Here’s a formula for calculating your customer acquisition cost:
Customer Acquisition Cost = Marketing Spend and Sales Expenses in a Given Time Period / The Number of New Customers Acquired in That Time Period
Customer Lifetime Value (CLV)
Customer Lifetime Value (CLV) is a metric that shows how much money the average customer spends on your products and services throughout their entire lifetime as a customer.
There are several customer lifetime value formulas that you can use to calculate your CLV.
This is arguably the most straightforward one:
Customer Lifetime Value = Average Annual Revenue Per Customer x Average Length of a Customer Lifetime in Years
This one can also work well, especially for e-commerce businesses
Customer Lifetime Value = Average Order Value x Average Number of Orders Per Year x Average Customer Lifetime In Years
If your business model revolves around subscriptions – as is the case with SaaS apps, paid newsletters, and membership communities – the math gets more complicated.
Empire Flippers, a marketplace where you can buy and sell online businesses, has published a great article on SaaS lifetime value (LTV).
The article focuses on two SaaS LTV formulas that were designed for SaaS companies but can be used to calculate CLV for any subscription business:
LTV= Average Revenue Per Account (ARPA) / Revenue Churn Rate %
LTV = Average Revenue Per Account (ARPA) x Gross Margin %/ Revenue Churn Rate %
(They are using average revenue per account instead of average revenue per customer because the same customer might have several accounts. If this is not applicable to your business, you can simply use average revenue per customer).
Note that the LTV changes significantly once you introduce the gross margin. You can read the article if you want to see examples of calculating LTV with these formulas.
Customer lifetime value is extremely important in the context of customer acquisition because it’s the main limiting factor when it comes to the customer acquisition cost. To put it simply, if you want to have a sustainable business, your CAC cannot exceed your CLV!
That being said, we believe that focusing on reducing your CAC as much as possible is misguided. Why?
Because, to quote Dan Kennedy, “Whoever can spend the most to acquire a customer wins”.
Our co-founder Russell Brunson had an opportunity to discuss this idea with Kennedy himself at one of our live events:
Ultimately, regardless of what your business model is, it all comes down to math.
If you can figure out how to increase your CLV, you can then increase your CAC so that you can outspend your competitors on customer acquisition.
We believe that the best way to maximize CLV is the Value Ladder sales funnel which we will discuss later in this article.
Sales Funnel Conversion Rates
Finally, you need to pay attention to your sales funnel conversion rates:
- Visitor-to-lead conversion rate – What percentage of people who visit your landing page give you their email addresses?
- Lead-to-customer conversion rate – What percentage of people who give you their email addresses end up buying your product or service?
- Customer-to-repeat-customer conversion rate – What percentage of people who buy your product or service end up making at least one other purchase?
You want to optimize your entire sales funnel for conversions.
Also, if you are using several different marketing strategies to drive traffic to your sales funnel, you should analyze the data to see how they compare in terms of conversion rates.
This can help you identify your highest-converting marketing channel. Once you know what works best, you can double down on it.
Or, as Alex Hormozi advises, you can ask yourself what’s stopping you from doing 10x more of what’s already working?
What is the Best Way to Acquire Customers Online?
We believe that the best way to acquire customers online is to build a Value Ladder sales funnel and drive traffic to it.
This is what our co-founder Russell Brunson did to grow our company from zero to $10M+ in annual revenue in just one year. It’s at $100M+ now!
There are two key concepts behind the Value Ladder sales funnel:
- You should start the relationship with the potential customer by providing free value via your lead magnet (a freebie that you offer to them in exchange for their email address).
- You should gradually build trust by continuing to provide free value via email and by providing increasingly more paid value.
So you start with the free lead magnet, then you pitch your least expensive offer (frontend offer), then a more expensive one (middle offer), and then the most expensive one (backend offer).
The real money is in the backend but very few people will be interested in your most expensive offer if you pitch it to them right out of the gate. They don’t even know who you are at that point!
Meanwhile, if you build trust gradually by following a proper Value Ladder progression, you will have a much easier time selling your most expensive offer.
After all, people who would have never bought it had you pitched it right out of the gate may become open to it once they purchase your front-end and middle offers.
Ideally, you also want to have a source of recurring revenue in addition to these core offers because recurring revenue is the best kind of revenue!
Here’s an illustration that can help you visualize the Value Ladder sales funnel structure:
And if you want to see a practical example, here’s one of the sales funnels that we are using for customer acquisition:
As you can see, it follows the Value Ladder structure:
- We ask the potential customer to take a completely free quiz.
- We offer them a copy of Russell’s book “DotCom Secrets”. They can get the book for free, all we ask is that they cover the shipping. This is known as a “FREE + shipping” lead magnet.
- We invite them to an invisible funnel webinar. This is a paid webinar that promises a tangible result and if at the end of it, people don’t feel like they got their money’s worth, they can get a full refund.
- We offer them either a paid online course or another paid event such as a webinar or a challenge.
- We invite them to our exclusive membership community known as the Inner Circle.
We also have our software subscription that we first pitched together with Russell’s book.
This sales funnel structure is what allows us to eventually sell our exclusive Inner Circle memberships that start at $50,000/year (yes, you read that correctly).
If Russell pitched a $50,000/year membership to someone right out of the gate, they would probably think that he was some sort of lunatic.
But starting with a free offer and building trust gradually means that by the time that same person reaches the Backend stage of our Value Ladder, they might consider joining our Inner Circle.
Remember that quote “Whoever can spend the most on acquiring a customer wins”?
Other SaaS companies in this space only sell software. Meanwhile, we sell software, books, online courses, events, memberships, you name it.
This makes it easy for us to maximize our customer lifetime value, generate more revenue at a high-profit margin, and outspend our rivals on customer acquisition.
The Value Ladder sales funnel is what allowed us to dominate the funnel builder market for over a decade.
You can use the same approach to become a dominant player in your niche!
The Top 3 Value Ladder Sales Funnel Variations
The Value Ladder graph above illustrates its general structure.
But when it comes to the specifics, there are quite a few Value Ladder sales funnel variations that can work well for different use cases.
Let’s take a look at the top three:
- The squeeze page funnel
- The webinar funnel
- The quote funnel
The Squeeze Page Funnel
The squeeze page funnel is the most popular variation of the Value Ladder sales funnel. It’s super simple and incredibly versatile!
This sales funnel only has two pages:
- The lead magnet landing page is where you pitch your lead magnet and ask for the potential customer’s email address in exchange for it.
- The thank you page where you thank the potential customer, explain how they can get access to your lead magnet, and let them know what they should expect next.
This sales funnel can work well for pretty much any business so we recommend starting here if you don’t have any previous funnel building experience.
The Webinar Funnel
The webinar funnel is a sales funnel where you use a free webinar as your lead magnet.
It has four pages:
- The webinar registration page is where you pitch your webinar and invite the potential customer to register by providing their email address.
- The thank you page is where you confirm the registration and thank the potential customer for signing up.
- The webinar page where the potential customer can watch the webinar.
- The appointment booking page or the sales page for your product or service where you will direct the attendees at the end of your webinar.
The sales funnel allows you to provide a lot of free value and consequently build a lot of trust prior to pitching your product or service.
You can automate it by using a pre-recorded webinar. However, we recommend starting with live webinars. Why?
The best way to create a webinar that converts is to do a ton of them and optimize your presentation over time based on the audience feedback.
Here’s what Russell has to say about the webinar funnel:
The Quote Funnel
The quote funnel is a sales funnel where you use a free quote as your lead magnet.
This funnel has two pages:
- The survey page is where you ask the potential customer questions to get the information you need for the quote.
- The thank you page is where you thank the potential customer for filling out the survey and ask for their email address so that you can send them their quote.
This sales funnel can work really well in industries in which using a conventional lead magnet wouldn’t make sense. Say, The Universal Waste Disposal Company used it to generate $100,000+ in new revenue!
How to Build a Squeeze Page Funnel For Your Business
Here’s a simple three-step process that you can follow to build a squeeze page funnel:
Step #1: Create Your Lead Magnet
Your lead magnet is the foundation of your entire sales funnel.
Not only does it serve as bait that helps you attract potential customers but it also demonstrates to those potential customers what they can expect from you.
That’s why you need to treat your lead magnet with the same respect that you give to your paid offers. After all, if you disappoint potential customers with the former, they won’t be interested in the latter!
Your lead magnet needs to provide genuine value if you want it to be effective. But what does that mean?
Alex Hormozi offers a helpful way to think about it. He advises creating a lead magnet that provides a complete solution to a narrowly defined problem.
That way, the potential customer will get value out of it, which will help you build trust.
Hormozi contrasts this approach with providing an incomplete solution such as an excerpt from a premium video. That is counterproductive to building trust, which is the whole point of offering a lead magnet to begin with!
Here’s how he explains it:
Step #2: Create a Squeeze Page For Your Lead Magnet
If you don’t have any previous landing page design experience, you should probably use a squeeze page template.
Ideally, you want to find a template that not only looks good but also has been proven to convert well. We have a bunch of high-converting squeeze page templates in our ClickFunnels template library!
Step #3: Set Up a Welcome Sequence
A welcome sequence is an email sequence that you automatically send to every new email subscriber.
Ideally, it should be designed to build trust so that you could then pitch your frontend offer at the end of it.
We recommend using this proven six-email template where each email that you send answers a question that a new subscriber might have:
Email #1 – Who are you?
Email #2 – How did you start doing what you do now?
Email #3 – What exactly it is that you do?
Email #4 – What makes you qualified to do what you do?
Email #5 – Who do you do this for?
Email #6 – How can you do it for me?
This email sequence mimics the natural pattern of conversation that people tend to follow when getting to know someone.
Sure, it’s designed to sell your product or service, so it’s more salesy than a casual conversation at a cocktail party would be. But you’d probably cover the same key points while chatting to a new acquaintance. After all, when people meet someone for the first time, they tend to immediately ask “What do you do”?
End each email except for the last one with a question and encourage the new subscriber to respond and tell you what they think. Ideally, you want them to actively interact with you, not just passively consume the content in your emails.
This welcome sequence should take six days to complete. Hopefully, by the time you send the last email, the new subscriber will trust you enough to take the leap and check out your frontend offer.
And if not, no big deal, you still have their email address and can continue building trust by providing free value!
What Software Should You Use to Create Your Squeeze Page Funnel?
We recommend using ClickFunnels.
Sure, we admit that we might be biased here, but our software has everything you need to build a squeeze page funnel:
- A squeeze page funnel template.
- A variety of proven, high-converting squeeze page templates.
- A visual editor that you can use to customize your squeeze page.
- An email marketing functionality that allows you to collect email addresses, set up automated email sequences such as the welcome sequence described above, and send one-off broadcast emails with time-sensitive announcements.
- A split testing functionality that you can use to optimize your sales funnel for conversions with A/B testing.
We have a free 14-day trial so you can check out ClickFunnels without any risk!
How to Drive Traffic to Your Squeeze Page Funnel
Okay, so now that you have your squeeze page funnel, what are the best ways to drive traffic to it?
You might have heard the terms “paid traffic” and “organic traffic”. These are common industry terms but we would argue that they are somewhat inaccurate because this juxtaposition between “paid” and “organic” seemingly implies that organic traffic is free.
The reality is that there’s no such thing as free traffic. “Organic” simply means that you aren’t paying directly to the platform that you are getting that traffic from.
But generating organic traffic requires a ton of work. You’ll either have to do that work yourself or you’ll have to outsource it to someone else. So you’ll either pay for organic traffic with money or with time.
Making a distinction between paying for immediate traffic and investing in building traffic-generating assets might be a better way to think about online marketing.
Paying for Immediate Traffic
Paid advertising is the most reliable way to get immediate traffic.
You can advertise on social media platforms including Facebook, Instagram, Twitter, LinkedIn, YouTube, and TikTok.
These platforms have great ad-targeting capabilities that allow you to target people based on their demographic traits, interests, hobbies, etc.
If you have a clearly defined dream customer persona, you can really zero in on your target audience with social media ads.
You can also also advertise on newsletters and podcasts. This is a less reliable way to get immediate traffic but it can work if there is a significant overlap between the audience of that newsletter or podcast and your target audience.
Finally, you can pay influencers to give you shoutouts. Influencer marketing is the least reliable way to generate immediate traffic but it can work if there’s a significant overlap between the influencer’s audience and your target audience.
Note that when it comes to newsletters, podcasts, and influencers, it’s probably best to partner with ones that have small-to-medium audiences. Why?
Because the smaller the audience, the more aligned it’s going to be. Audiences inevitably get diluted as they grow, which can make advertising to them less effective!
Building Traffic-Generating Assets
Paid advertising is probably the best way to get a brand-new business off the ground if you have the budget for it.
However, your long-term marketing strategy should include building traffic-generating assets such as:
- A social media following
- A YouTube channel
- A niche blog
Of these three types of traffic-generating assets, a niche blog is the most difficult to build. Why?
Because SEO is insanely competitive. The top three results on the first page of Google get the vast majority of clicks. This means that you are competing with everyone else who’s targeting the same keyword for one of those three spots!
That being said, it is still possible to build all three types of traffic-generating assets, you just need to be realistic about what it’s going to take. No matter which asset you choose to build, expect to put in at least 18 months of work until you start seeing results.
Drive Traffic to Your Lead Magnet Landing Page!
We would like to take a moment to emphasize that you should be driving traffic to your lead magnet landing page.
This includes traffic from all sources: social media ads, podcast ads, influencer shoutouts, your own social media, your YouTube channel, and your blog. Send all of it to your lead magnet landing page.
We understand that promoting your lead magnet instead of your products and services might seem weird. But guess what?
You can test this strategy before fully committing to it: use paid ads to send the same amount of traffic to your website or sales page and to your lead magnet landing page.
See for yourself which approach will generate the most sales!
Build Your Squeeze Page Funnel In Just Five Days!
We hope that reading this article helped you understand the theory behind our approach to customer acquisition.
Now it’s time to put everything you learned into practice with our 5 Day Lead Challenge.
Russell will walk you through the entire process step-by-step. You will create a lead magnet, build a squeeze page funnel, and launch it in just five days.
So don’t hesitate. Take action today. It can help you take your business to the next level!
Join Our 5 Day Lead Challenge Today!
P.S. This challenge is completely FREE!