6 Smart Strategies for Finding New Customers for Your Small Business

Regularly acquiring new customers is essential for any business to continue growing. But with customer acquisition costs rising 60% over the last five years, small businesses need a solution that’s effective and sustainable. Here are steps you can take to find new customers and determine what’s actually working in your business. 

Do customer research

You don't just want to look for anyone who's willing to buy from you — you want to find the right customers. The right customers need what your business offers and will buy from you for years.

Customer research involves collecting data about your target market so that you understand them better. You can do this by doing customer interviews, sending out online surveys, or tracking conversations on social media. Once you’ve gathered enough data, you can analyze it to look for patterns and trends.

Analyze your competitors

A competitor analysis helps you understand what's working in your industry and where gaps exist. Periodically review your biggest competitors' products, pricing, and marketing to spot opportunities you might be missing.

Pay attention to how they're positioning themselves online and what their customers say about them. For example, if a significant number of customers complain about the same issue, that could be an opportunity for your business.  

Create a customer acquisition plan by channel and budget

Before you spend any time or money, map out a customer acquisition plan that defines how many customers you need to acquire and how you’ll reach them. Most marketing channels fall into one of two categories: organic and paid.

Organic strategies might include search engine optimization, customer referrals, or content marketing, while ads or sponsored posts are paid strategies. Once you know which channels to pursue, you can assign a budget to each channel. Using a basic spreadsheet to track your spending by channel can help you make data-based decisions.

Low-cost ways to get your first 100 customers

If you’re new to business, focus on low-cost outreach first. Start by reaching out to your warm network, since personal referrals convert at a higher rate than cold outreach. Reach out to friends and former colleagues who might benefit from what you're offering.

Don't underestimate in-person networking opportunities either. Industry meetups, local business groups, and trade shows can put you in the same room as potential customers who may be interested in what you’re offering.

And look for online communities where your ideal customers already gather. Answering questions in forums and participating in industry groups helps you build credibility before ever asking for a sale. 

Use reviews and referrals

Online reviews and word-of-mouth referrals are among the most effective customer acquisition tools available. Research shows that 93% of customers consult online reviews before making a purchase, and more than 90% trust recommendations from people they know over any form of advertising.

After every purchase, follow up with customers and ask them to leave your business a Google review. To incentivize current customers to refer your business to their friends and family, offer a small perk, like a discount.

Track your customer acquisition cost by channel

Your customer acquisition cost (CAC) is calculated by dividing your total sales and marketing spend by the number of new customers gained in the same period. Ask new customers how they found you and track this data consistently. From there, you can compare your CAC across different channels. You may find that your best long-term customers consistently come from one specific source.

A good customer lifetime value (LTV) to CAC ratio is at least 3-to-1, which means you earn $3 in revenue for every $1 spent to acquire a customer. If you're below that threshold on a given channel, it's a signal to either make changes or reallocate that budget elsewhere.

CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.

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