Building a Better Customer Acquisition Model: A Step-by-Step Guide

Learn how to build an effective customer acquisition model. Get strategies to attract, nurture, and convert leads while optimizing costs and maximizing ROI.

Remember the good ol’ days when implementing a customer acquisition strategy was like following a reliable recipe? A user-friendly site, a dash of customer service, shoot your customers a few emails, pepper in some advertisements, and… Voila!

The issue is that your business strategy won’t continue to deliver good results if it stays the same for decades. If you find that your customer acquisition model is falling flat, it's probably time to remix, reallocate, retool, or even double-down.

You likely have several strategies in place, with plenty of analytics that give quantitative metrics for how those strategies are performing. But how do you translate the ones and zeros into actionable insights? How do you know which strategies are improving your bottom line, and which ones are just draining your marketing budget?

When creating the right recipe for overhauling your customer acquisition model, “data-driven” doesn’t quite cover it. When you zoom out to take a comprehensive approach, combining quantitative and qualitative data, you’re shifting from numbers and words into the realm of actionable insights. This guide shares how to do it. 

Why customer acquisition is important for business growth

A customer acquisition strategy is crucial for any business striving to thrive in a competitive landscape. It shows you have the capability to attract new customers systematically. When you communicate with stakeholders and request more resources, you can demonstrate exactly how you’ll use those resources to acquire new customers sustainably. 

A documented and proven customer acquisition model also helps reduce costs—or at least reveal if you’re spending more on acquisition than you’re making in profit. An understanding of how much it costs to acquire a customer, benchmarked against your average customer lifetime value (CLV), gives a tangible figure you can use to evaluate marketing performance.

A focus on revenue and profitability is crucial if you want to succeed—however, don’t let short-term goals interfere with the long-term value of your brand. Customer retention is often seen as the holy-grail, gold standard—but the best approach is balance. 

Ultimately, your customer acquisition and retention strategies should focus on keeping your customers happy. You know by now that acquiring a new customer is more expensive than keeping an existing one. Venturing further afield and tapping into fresh audiences, paired with retention strategies that bolster revenue from existing customers, is what brings long-term, sustainable success.

How does a customer acquisition model work?

A customer acquisition model is a strategy that helps your business reach new audiences and push them through the sales funnel. It provides the messaging that leads potential customers to the next destination on your customer journey map—and meets those customers on the channels they’re using, at the right time to hear your message. 

Your customer acquisition model should detail:

• Buyer personas and ideal customer profiles
• Acquisition channels you’re using to communicate with customers
• Stakeholders involved, and how sales, marketing, and support work together
• Content you’ll create, e.g. blog articles, FAQ pages, and cart recovery emails
• Segmentation strategies to identify where your audience sits within the customer acquisition funnel
• Measurement tools to evaluate performance and improve the model

Get end-to-end visibility of the typical customer journey by detailing their touchpoints.

Building a customer acquisition model that’s right for your business

A successful customer acquisition model attracts leads, nurtures them, and converts them into customers. The model should be tailored to your specific industry and objectives. For example, digital advertising might be a good strategy for generating website traffic, while referral programs might improve conversions.

Perhaps most importantly: The model can’t remain stagnant. As customer behavior and market conditions change, the model should adapt accordingly.

Take leading cookware brand Caraway, which enlisted the help of Shopify to mitigate rising acquisition costs, competition, and attribution complexities. The company was negatively impacted by iOS privacy changes that made it difficult to collect customer data that it could use for personalized retargeting.

“We do see continued pressures and costs elevating in the customer acquisition space,” says Caraway’s VP of growth and digital product, Connor Dault. “It's what 50% of my team is focused on 100% of the time, so it's obviously a huge, huge area of priority for us.”

Caraway rebuilt its customer acquisition model around Shop Campaigns. It began incentivizing first-time customers—who were already using the Shop app and blazing-fast Shop Pay checkout—by boosting the value of Shop Cash in their digital wallet. 

Each new acquisition was easily attributable, and Caraway was only billed when a new customer closed. This led to a significant reduction in acquisition costs, a remarkable 16x growth in Shop app orders and over $1 million in revenue at a cost per acquisition comparable to other channels in the model.

Improving your customer acquisition strategy

Make your strategy sustainable

A sustainable customer acquisition strategy is one that continues to succeed in the long term. If you find that your existing customer acquisition model is no longer working, you should nix it and reallocate the budget to one that does. 

Before overhauling your customer acquisition strategy, make sure you have the time and resources to sustain your effort. If your team is already burnt out and overworked, or your budget was reined in when stakeholders didn’t see an ROI as quickly as they expected, an overhaul could cause friction—or even result in the plug for the entire program being pulled. That’s before you add in the confusion inflicted on customers. 

Build in flexibility

Market conditions are constantly changing. Currently, high inflation is squeezing consumers’ disposable income and impacting their willingness to try new brands; but that could all change in a heartbeat. A rigid customer acquisition model limits your ability to adapt to new opportunities, trends, or risks. 

TikTok is perhaps the most notable example of a game-changer in the past few years. TikTok usage boomed during global lockdowns, but the lean into short-form video content proved not to be another fad. Legacy platforms Facebook and Instagram introduced Reels to keep up. Now, short-form video content is preferred by the vast majority (96%) of consumers.

A customer acquisition model that allocated all resources toward email or traditional advertising campaigns wouldn’t have the flexibility to experiment with this emerging trend. The business would miss out on the first mover advantage that benefited Makeup By Mitchell, the cosmetics brand that first jumped onto TikTok Shop in 2020 and recently ran a flash sale that drove $2 million in revenue in just one week.

Find your target market

Understanding your ideal customer is one of your biggest assets when overhauling your customer acquisition process. Not all consumers are your best consumers, and your customer acquisition efforts are a waste of resources if they’re not targeting the right people.

Comprehensive analysis allows you to identify and double-down on the strategies that bring you the most ROI, the highest loyalty and customer lifetime values, and the most rewarding customers to do business with. (Because let’s face it: just because a customer is profitable, doesn’t always mean they’re worth it.)

For starters, segment your visitors and contacts to customize your messaging. Quantitative data shows you their demographics and behaviors, but who are they really? What are their biggest pain points, and what does your brand mean to them personally? Are you harnessing your communication channels to effectively illustrate your value to them? What are they interested in, and where do they get the information that satisfies these interests? What other corners of the web make up their natural habitat?

Use insights to uncover new opportunities that you never even knew were there, like a new type of website to advertise on, or a completely new medium that you haven’t ventured into yet but that your ideal customer is into.

The ultimate goal of these efforts is to zero in on your buyer personas or ideal customer profiles—the customers who love your brand just as much as you love them.

Once you know these intimate details, you can leverage them for your acquisition strategy. For example, do your ideal customers hate Facebook but love podcasts? Maybe it’s time to cut an underperforming channel in your budget and reallocate it to a company podcast. Is your key demographic all over Instagram? Then that's exactly where you should start investing, especially because the wins on Instagram for ecommerce are piling up fast. 

Even if you don’t create a new customer acquisition model, at least you know to stop wasting money on the old model so you can reallocate to a strategy that works, like offering free shipping or a better unboxing experience.

Diversify your approach

Ever heard of cross-pollination? It’s when bees spread pollen between a variety of plants, bringing about variations of species that better withstand time and nature—and it’s a good metaphor for an effective customer acquisition model.

Putting all of your eggs in one basket leaves you at risk of one platform change sabotaging your entire model. Brands that relied on third-party cookies to collect customer data for retargeting, for example, lost 30% accuracy on targeting algorithms overnight—costing an estimated $10 billion in ad revenue—when Google and iOS phased the cookies out. 

Build your model even more protection from risk by funneling each prospective customer from external customer acquisition channels toward your email list. Social media platforms are always looking to limit reach in a bid to push brands toward paid advertising—the costs of which are only increasing. Email, however, is a direct point of contact you have with shoppers that no one else can touch.

Track your customer lifetime value

Customer lifetime value (CLV) is the estimated net profit an individual or business will provide over their lifetime as a paying customer, and it’s a helpful factor to consider when evaluating your customers.

A customer acquisition cost that supersedes CLV means you’re spending more money on marketing than the customer will bring in profit. 

Let’s say that your SEO strategy is pulling in the highest-ticket purchases, while your Facebook ads are attracting customers who buy lower-ticket items. Strictly by the books, you might conclude that your SEO efforts deserve a bigger slice of the customer acquisition strategy pie. But if you look more closely, you might find that those high-ticket SEO purchases tend to be one-off and less frequent, while your Facebook customers are consistently and loyally returning. As a result, Facebook brings in roughly the same revenue as SEO.

However, when you factor in the higher costs of your SEO budget in comparison to your Facebook ad spend, your Facebook CLV is actually higher.

You still need both—but now you’ve got the data and insights to back up a greater investment in Facebook ads, and motivation to determine how to increase repeat purchases from customers acquired through your SEO strategy.

Enhancing your customer acquisition model

Craft an omnichannel marketing journey

To create a seamless customer experience that effectively nurtures leads and boosts conversions, businesses must adopt an omnichannel marketing strategy as a part of their lead generation process. This alone can increase revenue: Per one report, omnichannel shoppers spend 1.5 times more than single-channel buyers, and are three times more loyal than digital-only customers.

An omnichannel customer acquisition model integrates various communication channels to provide a consistent and personalized journey for each customer, regardless of how or where they interact with the brand. That gives customers the ability to:

• Check inventory levels online for their local retail store
• Buy items online and schedule in-store or curbside pickup 
• View products at a pop-up and receive a personalized email cart link to shop online 

Shopify pulls data from various sales channels—your storefront, email list, marketplace listings, social media storefronts, etc.—into a single platform. When combined with third-party apps that synchronize data on both sides, you can use Shopify’s marketing automation features to target shoppers on the channels they prefer, using data you’ve already collected.

Develop lead nurture journeys

It’s unrealistic to expect customers to buy off the back of a single marketing campaign. Today’s buyers rely on more channels to interact with brands—and the good news is that omnichannel customers spend more (up to 10% online and 4% in-store, on average).

Lead nurturing involves consistent and targeted communication with prospects to build relationships and trust over time. It’s about delivering the right message, to the right person, at the right time.

Develop lead nurture journeys as part of your customer acquisition strategy, as opposed to relying on full-scale public campaigns. Segmentation is the simplest way to do this at scale. You can configure marketing automations that send personalized messages when customers are ready to receive them, like:

• Using pop-up windows to collect email addresses in exchange for personalized offers, like 10% off boots when people visit your “Boots” category page
• Sending product recommendations through email based on zero-party data they’ve shared in a quiz
• Sharing personalized directions to your retail store via email when a subscriber clicks your “Visit us” page
• Promoting buy online, pick up in-store offers in geotargeted social media ads that target people within a certain radius of your store 
• Cart recovery emails that display items a shopper has left in their cart 

Track and optimize key metrics

Are you truly doing everything you can to meet—and hopefully exceed—the expectations of your customers, while earning new visitors’ trust that you’ll exceed their expectations too? Data is the only way to find out for certain. 

Data-driven decision-making involves continuously tracking and optimizing customer acquisition strategies based on key performance indicators (KPIs) such as:

• Customer acquisition cost (CAC)
• Customer lifetime value (CLV)
• Monthly recurring revenue (MRR) 
• Return on investment (ROI)
• Customer retention rate 

Say, for example, you’ve run a conversion rate optimization (CRO) audit and identified areas of friction on your website: Unclear navigation and lack of social proof that are negatively impacting customer acquisition. While you did a great job of driving traffic to your online store, their subpar experience when they got there caused them to leave—requiring you to splash more money on retargeting to drive them back.

Benchmark your site’s conversion rate pre- and post-audit to confirm or disprove the hypothesis that poor on-site experiences are driving up acquisition costs.

“We've optimized our website for a superior user experience, making it easier for customers to find and purchase products,” says Guillaume Drew, founder of Or & Zon. “Real-life testimonies and reviews about our products and service have also enabled us to build trust with potential customers, which, in turn, has helped lower our CAC.” 

Advanced analytics and business intelligence tools are indispensable for tracking these KPIs as your strategy evolves. 

Shopify, for example, has an all-new analytics platform that's unmatched for extracting meaningful business insight. Access your most important customer acquisition metrics, and build custom reporting dashboards, to monitor the impact of your customer acquisition strategy on sales and customer engagement. 

Forecasting and optimizing your customer acquisition model

There are three keys to predicting the long-term success of a new customer acquisition model: acquisition channels, expected growth rate, and direct sales.

Acquisition channels and traffic sources

There is no standard “best” mix of acquisition channels. The best mix for your business depends on which channels your target customers use, and whether you have enough resources to commit to marketing on those channels. 

Popular acquisition channels include:

• Inbound sources, such as social media, search engine optimization, content marketing, and word-of-mouth referrals. 
• Outbound sources, such as paid advertising, social media ads, and email marketing.

Learn how each channel performs in terms of reach, conversion rate, and cost. Some are more lucrative than others—like TikTok, which has partnered with Shopify to make it easier for retailers to sell their products through a TikTok Shop (instead of having to drive traffic toward their online storefront).

Expected growth rate

Expected growth rate is an estimate of how much you’ll grow your customer base through each acquisition channel. This shouldn't be a pie-in-the-sky figure—base your expected growth rate on industry benchmarks, historical data, and market trends. 

Say you’re bolstering your customer acquisition strategy with Shopify Audiences , which creates new advertising lists to expand and fine-tune marketing audiences. Research shows that Shopify Audience can cut acquisition costs by 50% and drive up to double the retargeting conversions of a standard campaign, so apply a conservative 1.5x multiplier to results from your current strategy to get an expected growth rate. 

Budget and resource allocation

More spent on marketing generally leads to greater reach and traffic, assuming the money is allocated effectively. But realistically, you don’t have an unlimited line of credit to spend on marketing, so make every dollar count. 

Brands usually allocate between 5% and 10% of their annual revenue to marketing. Split your allocation based on the expected growth rate of each acquisition channel, and include costs such as marketing and sales salaries, travel, and equipment.

For example, if you set aside $50,000 for retargeted Facebook ad campaigns and expect a CPA of $25, you can forecast acquiring 2,000 new customers. If your CLV is $50, you’ll make double the revenue you spend on customer acquisition through this channel. 

Build a solid customer acquisition model to keep costs down

A customer acquisition model is essential for attracting new customers and growing a business. Base your model on four major factors: acquisition channels, expected growth rate, budget, and specific industry/business goals.

To level up your customer acquisition model, focus on attracting new customers and generating more revenue. Measure marketing ROI, and improve your customer acquisition strategy based on industry benchmarks and historical data.

Shopify makes all of this possible, with a new and improved analytics feature that lets you build personalized reporting dashboards for easy monitoring. That, coupled with Shopify’s native marketing automation features, is a strategic lever you can pull to acquire customers and keep marketing costs down.

FAQ on customer acquisition models

What are customer acquisition models?

Customer acquisition models are the strategies businesses use to acquire and retain customers. They include the acquisition channels (e.g. online or offline marketing sources), messaging, and automations that are set up to guide potential customers through the conversion funnel.

What is an acquisition model?

An acquisition model describes how a business acquires new customers. An effective acquisition model doesn’t just target anyone and everyone—but a select list of people who fit the brand’s buyer persona and will become repeat buyers.

What is the theory of customer acquisition?

The customer acquisition theory helps brands turn potential customers into loyal customers. The central idea is that if your marketing mix reaches your target market on the marketing channels they’re using, you can drive high-value customers to your business and reduce customer acquisition costs.

What are the main types of customer acquisition strategies?

• Search engine optimization (SEO)
• Social media advertising
• Email marketing
• Word-of-mouth referral programs
• Influencer marketing
• Customer testimonials
• Video marketing
• Content marketing