There‘s no time like the top of the year to pause and reflect on your business strategy, especially when it comes to how you bring in customers. You have the opportunity to change your approach according to new opportunities — and challenges. And I'm here to help you do just that.
I ran a GlimpseAhead survey of 100 service, support, and customer experience professionals about the biggest customer acquisition challenges they‘ve had and which businesses should be on the lookout for the most in 2024. In this post, I’ll walk you through their responses and share what you should keep in mind for the year ahead.
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Customer Acquisition Challenges You May Face This Year Survey
To start off, I wanted to get a feel for how different professionals felt about acquisition challenges they dealt with in the past.
At the end of 2023, what are three of your team’s biggest customer acquisition or retention challenges?
Understanding Customer Needs (50%)
By delving deep into customers' needs, preferences, and desires, service professionals can tailor their offerings, messages, and interactions to resonate with their target audience, ultimately driving higher conversion rates and fostering brand loyalty.
Professionals can find it challenging to understand customer needs for their acquisition strategy due to evolving consumer behavior, diverse preferences, varied communication channels, and data overload, making it complex to pinpoint and address client pain points accurately amidst competition. Adopting a data-driven and customer-centric approach is crucial to navigating these challenges effectively.
Customer Messaging & Communication (46%)
Effective customer messaging and communication are essential components of a service professional's acquisition strategy as they serve as the bridge between the business and its potential customers.
In the realm of acquisition strategy, it can be challenging for service professionals due to factors such as not having accurate or in-depth data on their target demographic, inaccurately addressing customer needs or pain points, inconsistency in tone and branding, and the ever-evolving market trends that prospects gravitate towards.
Without clear and enticing messaging, it's hard to garner attention.
Leveraging the Right Tools & Technologies (30%)
Service professionals face challenges in finding the right tools and technologies for their acquisition strategy due to the abundance of options, varying technical capabilities, budget limitations, integration complexities, and the need to stay abreast of evolving digital trends. After all, it seems like there's new AI tools coming out every other day.
Selecting, implementing, and optimizing tools that align with business goals and cater to customer needs requires extensive research, planning, and ongoing learning to effectively drive successful acquisition outcomes. And oftentimes, the tech may be too new to know whether it's effective or not.
To better get a pulse on the metrics professionals are paying attention to the most, I lead to the next question.
With your current customer acquisition strategy, which metric are you trying to improve the most in 2024?
The top three metrics chosen tell a story within themselves.
Customer Retention Rate (43%)
Service professionals are keeping an eye on CRR the most, and it comes as no surprise. It's crucial for customer acquisition as it indicates customer satisfaction and loyalty, impacting acquisition success.
A high CRR leads to lower acquisition costs and increased customer lifetime value, while a low CRR signals retention challenges that need attention to sustain growth and profitability. Monitoring CRR helps service professionals make informed decisions and prioritize retention efforts for effective acquisition strategies.
Customer Lifetime Value (21%)
Knowing lifetime value is crucial for customer acquisition as it provides insights into the long-term profitability of acquiring and retaining customers. A healthy CLV is hard to achieve because it requires accurate data, predictive analytics, ongoing customer relationship management, and a deep understanding of customer behaviors and preferences.
Service professionals must invest in building strong customer relationships, delivering exceptional experiences, and continuously optimizing strategies to maximize CLV, which can be challenging amid changing markets, evolving customer expectations, and fierce competition.
Despite the difficulties, a solid CLV metric is essential for making informed acquisition decisions and prioritizing high-value customers.
Customer Acquisition Cost (21%)
Tied with CLV, customer acquisition cost is used to determine the effectiveness and efficiency of their acquisition strategies in relation to the revenue generated from new customers.
Having a healthy CAC is challenging because it involves balancing the costs of acquiring customers with the value they bring to the business over their lifetime — but maintaining it is easier said than done when inflation has hit record highs for both businesses and direct consumers.
Much of customer acquisition is based on the mindset of the customer, and that changes with time based on many factors explored in the next question.
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Are there any notable changes in customer preferences or expectations that are impacting your acquisition tactics?
This open-ended question gave a multitude of perspectives, but I can summarize the responses into these buckets:
1. Customers want more value for less.
“Customer needs are always changing, and they always want more for less,” one respondent shared.
How customers perceive the benefits of a product or service in relation to its cost. Customers are more likely to make a purchase when they believe that the offering provides significant value that outweighs the price they pay. Positive value perception can be influenced by factors such as product quality, features, uniqueness, brand reputation, and customer service.
2. Customer service expectations are rising.
Customer service expectations directly impact customer acquisition by influencing how potential customers perceive a company's commitment to addressing their needs and concerns. Meeting or exceeding customer service expectations can enhance brand reputation, build trust, and encourage word-of-mouth referrals, thus attracting new customers.
One response that stood out to me was, “Customers demand more transparency and quick transactions.” Transparency and timeliness demonstrate respect for their time and concerns, making for a positive customer experience, and if anything, it's a new standard to lean into transparency when customers can always leave to competitors they find more trustworthy.
3. Customers want more personalized marketing and sales teams.
Customers should be experiencing the same business they see in ads as they experience in service and sales, and they will leave for a competitor much faster than you think.
A cohesive and coordinated approach ensures a seamless customer journey and consistent brand experience, and allows each team to work together to understand and serve the right personas when they start their journey to purchase.
Misalignment between these teams can result in disjointed messaging, disconnected customer interactions, and inefficiencies that hinder acquisition efforts.
4. Customers expect innovative tech.
A common perspective shared was, “Competitors and brand app aggregators are using AI,” and “Pretty much everything we are working towards is happening pretty fast.”
Keeping up with an everchanging environment is tough enough, but when that change means incurring more costs and changing pre-existing processes, I had to find out what service professionals were planning for new technologies introduced to the market, leading to the next question.
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Templates to communicate price increases, apologies, thanks, and notifications to your customers with sincere, on-brand messaging.
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All fields are required.
Due to these challenges, do you plan to invest in new automation technology or AI to streamline your customer acquisition?
About 50% of service professionals claim they will or already have plans to invest in new automation technology like AI to streamline customer acquisition in 2024.
Additionally, about 25% of service professionals claimed they were considering the possibility of implementing automation technologies before the year ends.
The remaining 25% of respondents said they would not invest in AI due to two key reasons:
- Risk: Using AI feels risky, considering recent headlines of certain companies landing themselves in hot water for copyright infringement and other lawsuits. Additionally, it can be tedious to learn and implement new tech for your team.
- Hard to get leadership buy-in: One of the first responses I read laid it out clearly, “I wish my company could (invest in AI), but I don't have the authority.” Many service professionals see the value of automation technologies but can't convince decision-makers who have different plans in mind.
To wrap up this up, and also to get a pulse check on what service professionals are thinking about going into the year, I closed with this last prompt.
The last question I had for service professionals was the main reason for this post, what they believed their biggest acquisition challenges were going to be in 2024, and the biggest takeaways reiterated their biggest pain points for this year.
Customer Acquisition Challenges in 2024
- Communicating with customers in a personalized way.
- Risk of investing in new automation technologies too soon or too late.
- Dedicating too much time and effort to retention over acquisition.
- Misalignment between marketing and service.
How to Stay Ahead of Customer Acquisition Challenges
Don't let customer acquisition challenges derail your path to profitability in 2024. By anticipating and addressing these hurdles head-on, you can position your service business for success and sustainable growth.
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