Introduction to Customer Acquisition
The Basics of Patient Acquisition
What is Patient Acquisition?
Patient acquisition (referred to as 'customer acquisition' in a more general sense) is the process of bringing new patients or clients to your business. It’s the combination of marketing and sales strategies you use that help turn a stranger into a customer.
It’s important to make a distinction between lead generation and patient acquisition at this point because while they both attempt to attract new visitors to your business in the hopes of turning them into patients or clients, they are two different strategies.
Lead generation, as a strategy, is suitable for businesses that have a long buying cycle, offer a high-priced product or service, or require a sales team to actually make the sale.
Patient acquisition can be used in conjunction with a lead generation strategy, where you implement strategies across multiple channels to help nurture the leads you’ve collected towards becoming a client, or it can be implemented as a stand-alone tactic, where your aim is to take people from a stranger to a patient without the need for them to become a lead first.
Another way to think about the difference between the two is in terms of dollars.
A lead is someone who has indicated they want to hear from you further. They might have signed up for your newsletter, or downloaded a resource from your website, or reached out to your sales team with an inquiry. Capturing this information is the goal of your lead generation activities.
From here, a patient acquisition strategy steps in and seeks to turn this personal information into revenue by nurturing the relationship, building trust and positioning you as the solution to the lead's problem.
- Lead generation = personal information
- Customer acquisition = revenue
As you’ll soon see when we discuss patient acquisition channels and strategies, most businesses will find success with a combination of lead generation tactics supported by a patient acquisition plan.
Measuring Customer Acquisition
Like anything in business, you want to be able to calculate the cost of bringing in a new patient or client. To do this we use a concept formula called Customer Acquisition Cost, or CAC for short.
Side note: For the sake of simplicity, and to align the content of this guide with the wider marketing and business community, we will use the term 'customer' here to mean patient. Since these metrics are universal, we will stick to using the most commonly used terms.
CAC is an important metric as it directly ties revenue back to marketing costs, and is usually calculated per campaign or over time, usually a financial year, but sometimes quarterly or even monthly.
To work out your CAC is quite simple, but it does require access to plenty of data. The formula is:
CAC = MC/CA
Where MC equals ‘marketing costs’ and CA equals ‘customers acquired’
Let’s use an example:
Say you spend $10,000 in the first quarter of the year on ALL marketing costs and in that time you acquired 100 customers, then your CAC is $100 - it costs you $100 to acquire one customer.
Working out how many customers you acquire is easy, but figuring out how much you spent can be trickier. CAC only works when you include ALL marketing costs, so the full formula would look like this:
CAC = (MC + W + S + OS + OH) / CA, where:
- CAC is customer acquisition cost
- MC is marketing costs
- W is wages for marketing and sales
- S is marketing and sales software
- OS is outsourced services
- OH is overhead for marketing and sales
- CA is customers acquired
Many businesses get caught in the trap of thinking that marketing costs are only those related to advertising spend, but it actually goes much deeper than this and knowing your true costs will help you greatly improve your customer acquisition efforts (not to mention better understand and forecast cash flow and business health!)
CAC is a good metric to show you how much you spend versus how much a customer brings in, or how much they are worth to you. However, you need to use it with other metrics, such as lifetime value, because:
A. It doesn’t show how much a customer spends with you, or how frequently they make a purchase. It might cost $100 to bring in a customer, but over their lifetime (which we’ll explain below) they might spend $10,000 with you. In this case, you might want to increase your marketing spend as $100 in exchange for $10,000 is pretty good, and
B. It doesn’t take into account a long buying cycle. If you spend $10,000 in Q1 but those customers don’t purchase until Q2 your CAC for that quarter will be skewed. While this is not necessarily a bad thing, understanding this will improve the quality of your reporting and help you make more informed decisions.
Customer Lifetime Value
Customer Lifetime Value, or LTV, is another important metric you should be looking at when reviewing your customer acquisition success. A customer’s LTV is the estimated net profit that an individual or business will provide over their lifetime as a paying customer.
Calculating LTV requires understanding your average purchase amount and purchase frequency, but it isn’t a difficult metric to work out. Here's how:
- Calculate your Average Purchase Value (APV) = total revenue / number of orders
- Calculate your Average Purchase Frequency (APFR) = number of purchases / number of customer
- Calculate your Average Customer Value (ACV) = APV x APFR
- Calculate your Average Customer Lifespan (ACL) = total customer lifespans / number of customers
- Calculate your Customer Lifetime Value = ACV x ACL
This example comes courtesy of HubSpot, who go into detail in a blog about customer lifetime value, using coffee as an example:
1. Find the average purchase value (APV)
If you're anything like me, you drink A LOT of coffee. At my local cafe, a large cappuccino costs $4.50.
2. Find the average purchase frequency (APF)
Again, I like coffee so I buy 2 cups a day = 10 coffees per week.
3. Calculate the average customer value (ACV)
For my local cafe, I represent a value of $45 PER WEEK
4. Work out the average customer lifespan (ACL)
Working this metric out is tricky, and may require some educated guesses, but let's say I'll continue to use this cafe for 2 years, before I move office and need to find a new favourite spot.
Once you've figured out the lifespan, make sure the time period matches what you have from part 3. If we are using weeks to measure how much I spend, then break down two years into 104 weeks.
5. Calculate CLTV
Putting everything together, we get:
Customer value ($45 per week) x average lifespan (104 weeks) = $4,680
* It's important to note that this example only uses 1 customer. At each step, you should use all the customers you have data on, or at least enough to come with up an average that is representative of the majority of your customer base. A good way to do this is to export customer and purchase data into a spreadsheet and calculate the averages.
CAC and CLTV
Now that we know how much we spend to acquire a new customer (CAC), and how much the average customer is worth to us (CLTV), we can make a very informed decision about how much our marketing budget should be.
I promise that if you perform these two calculations you will be lightyears ahead of your competitors, most of whom are simply guessing at what they should be spending and how much they are getting in return.
When you combine CLTV and CAC you get a complete picture of how much it costs to bring in a customer, and what that customer is worth to you. In the above example, if the cafe knows its CLTV is $4,680 they have a benchmark to improve on. They can look to upsell to increase this number, try to get me back for more coffee each day, or try and get me to refer some friends and colleagues.
When you look at this metric with CAC, you also give yourself a guide for how much you should spend to acquire a customer, and how healthy your marketing efforts are for your bottom line.
Let's say the above cafe brings in 100 new customers in that 2-year period, so revenue would be $468,000. It also costs them a total of $150,000 to acquire those 100 customers.
So their ratio of CLTV to CAC is approximately 3:1, which represents a very healthy business. They are spending enough money to bring in new business, and in theory (if their pricing strategy is good) they should be profitable.
They now also know that they could afford to spend a bit more in marketing to try and increase the number of customers they are closing.
One final note: CAC and CLTV, while very good metrics, do not take into account any costs involved in servicing a new customer. They only consider what you spent to acquire them.
Going back to the above example, the cafe has a healthy CLTV:CAC ratio, but it will have other costs that need to be paid. Wages for chefs and baristas, electricity and gas, food and drink - these are all expenses that aren't directly tied to acquiring a customer but are needed to service them. So a healthy CLTV:CAC ratio becomes meaningless if all the other costs associated with running the business are too high.
Minimising Your Customer Acquisition Costs
Having the ability to achieve more with less is a vital skill for any marketer and business owner. And while you may think your results now are great, chances are there is always room for improvement.
Using CAC as a measure of success is a great tool, as it gives us an indication of where we are now and can provide motivation to find ways of getting better. If you're using CAC to measure your efforts, here are a few ways you can lower your acquisition costs:
1. Boost your conversion rate
Getting people to your website is only half the battle - turning them into leads or patients is the other half. For many health and wellness businesses, improving your ability to convert visitors is the quickest way to improve your CAC and lower costs. After all, you've already spent time and money getting people to visit you, so if you can improve the number of patients you get for the same amount of marketing costs, you'll see an improved CAC.
2. Increase your CLTV
Another way to improve your CAC is to increase the value each patient represents to you. Maybe you can find a way to upsell them to a new product or service, or get them to refer new patients and clients to you? We'll cover patient retention as a conversion strategy in more detail in a later section of this guide.
3. Improve your current strategy
Sounds obvious, but when was the last time you took a deep dive into your current efforts and the results you're getting, in the hopes of finding opportunities for improvement? In our experience, prioritising testing is one of the best things any business can do to grow faster and cut back costs.
Customer Acquisition in Action
Developing a Customer Acquisition Strategy
Right, so you want to get started with some deliberate patient acquisition attempts, but don't know where to start. Let's go over some actionable steps you can take to come up with a plan:
1. Identify Your Persona(s)
The first step is to figure out who your ideal patients are so that you can target your efforts towards them. If you haven't built your customer personas yet (sometimes referred to avatars) check out this handy guide on creating buyer personas.
If you do already have your personas worked out, awesome! Use these to figure out who you'll target and what you need to know about them.
2. Identify Your Goals
When it comes to patient acquisition, your usual target is more patients, and more revenue, but this isn't always the case. For some businesses, you might be looking for trial users to help you work out the 'kinks' of a new service before it is available to the public (gyms and personal trainers do this to test new workout and fitness programs with a small group).
3. Calculate Your Key Metrics and Benchmarks
Before you get started planning your strategy you should take the time to work out your CAC and CLTV, as well as any other benchmarks that may be useful in not only planning your acquisition approach, but also in monitoring performance and understanding when things are going astray.
Once you work out your starting points, note them down somewhere for future reference - you should be checking performance against benchmarks on a regular basis, most likely monthly, to get a feel for how things are progressing.
4. Pick a Channel
You might need to circle back to this after we go into more detail on the specific channels and tactics below, but you should at least have some idea of where you want to spend your time, effort and money. Be aware of your customers and where they spend their time online, and how they find and consume information.
If you haven't already, read our beginner's guide to lead generation for healthcare businesses to get an understanding of how to find your ideal patients and clients online and what channels you can use.
5. Develop a Strategy for Each Channel
Once you've chosen a channel, you'll need to plan out how exactly you plan on using it to acquire customers. After all, how people behave will vary from channel to channel and platform to platform. Not only that, but their relationship with you also changes, and you'll need to keep this in mind when using each channel.
For example, if you want to use social media you'll need to figure out what content your audience is looking for, and come up with a plan to create it.
If you decide to run paid ads on Google you'll need to figure out what information your audience searches for, and the terms they use when searching for it. You'll also need to develop ads, build a specific landing page and so on.
6. Plan to Track Everything and Monitor Performance
It's important that you carefully monitor the performance of your efforts as you would any marketing activity. You should be monitoring your total spend and results per channel, and ensuring KPIs are being met. You also need to regularly calculate your CAC and compare with your benchmarks to ensure you're efforts are actually providing a positive return.
Customer Acquisition Channels and Tactics
HubSpot offers a simple way of defining customer acquisition channels:
Customer acquisition channels are methods, platforms, and strategies through which companies attract new fans, readers, and leads. The best channels for your business will depend on your audience, resources, and overall strategy.
Below are some of the more common channels small businesses can use to acquire new customers and nurture existing leads.
Possibly one of the most powerful channels available to health and wellness businesses, email marketing has been shown to return $38 for every $1 spent. Not only can it help generate revenue, but it is also a great way to stay in touch with leads and customers and can help achieve business goals other than revenue, such as positioning the brand as a thought leader by sharing blogs you’ve written, or by building an online community by promoting causes your business is involved with.
Email marketing is also a great way to gather intelligence on your target audience. By tracking link clicks you can start to gauge what topics your subscribers are most interested in. By tracking open rates you can start to determine how often they want to be communicated with and what piques their interest, as determined by your subject line’s ability to get them to open your email.
When it comes to acquiring new patients through email, the key is to provide value to your readers in every email. Remember, they handed over their personal information for a reason, and this level of trust needs to be repaid. Here are some quick and easy ideas you can implement immediately:
- Are you publishing blogs? Email your subscribers and leads to help them solve their problems and showcase your knowledge.
- Are you launching new products and services? Tell your leads about it, you never know who will be interested in buying it.
- Are you taking on new patients or clients? The majority of your emails should be helpful, but you should also be regularly sending 'sales' emails where the goal is to get the reader to take the next step towards becoming a patient or client.
Content marketing is a great way to acquire patients as it serves many purposes: it helps you get found online when your audience is seeking information and answers, it showcases your knowledge and builds trust, and provides multiple teams with information (content can be hosted on your blog, shared across social media, included in emails, and used by your sales team).
Content marketing usually comes in the following formats:
- Lead magnets/content offers
Blogging is a great lead generation and patient acquisition tool that every business should be looking to use. It allows you to showcase your knowledge and expertise, provides useful content for sharing across social media and emails and provides value for your subscribers and customers.
Creating lead magnets is a way to further capitalise on blogging, adding a way for blog readers to become leads by offering high-value additional resources in exchange for their personal information. These leads are then nurtured by your patient acquisition strategy.
Finally, video gives you access to a new medium to share your story and knowledge. While your content may begin life as a blog, there's no reason it can't become a video for you to share with your audience.
Now, it may seem like content marketing is more of a lead generation strategy, and while it certainly is great for attracting visitors to your website, it also plays a crucial role in acquiring customers.
Content marketing allows you to provide ongoing value to leads while asking for nothing in return. By consistently showcasing your expertise and helping leads solve a problem, you position yourself as the go-to provider when they are ready to buy.
Partnerships are another tool for acquiring new patients. Here’s how they work:
Firstly, you want to find an existing business that has a decent patient and/or subscriber base and think about how you can help their customers even further.
For example, let's say you're a physiotherapist and you specialise in sports rehab, specifically in back pain. Your ideal client is an amateur, yet avid, sportsman who plays regularly in organised competitions. While they will never earn a living, their chosen sport is a big part of their lives and the ability to play well and for a long time is very important to them. So much so that they are willing to pay good money for rehabilitation and preventative physiotherapy.
Now let's imagine you've just found a golf podcast with a decent following. You reach out and ask if they are looking for new guests, and explain how your specific knowledge related to treating and preventing back pain (a common complaint amongst golfers) would make you a perfect guest for the show. Back pain is a complex issue, and with so many muscles involved in a golf swing, helping break it down in simple terms could really help the show's listeners.
The hosts agree, and you come on to talk about the importance of proper warm-ups, what to do to prevent injury, and some at-home techniques for treating minor injuries. You've provided great value to the podcast listeners (a win for the hosts) and also gotten yourself some exposure amongst your ideal clients (a win for you). The next time they have back pain, hopefully, they remember you and book in for a consultation session.
This is just one example, and partnerships can take many shapes and forms - the important thing to remember is there must be an equal exchange of value between the two partners.
Events are an underutilized patient acquisition channel, especially for small healthcare businesses. Having worked in the events industry for some time I understand the hesitation - event involvement, particularly paying to be a sponsor, can seem like a large investment (both time and money) for little return.
Usually, this preconceived notion of little to no return on investment is unfounded, and businesses that get involved in the right way often see great results.
There are three ways events can help acquire customers.
The first is simply attending an event. Events are great networking opportunities that a lot of large businesses use very well.
Secondly, you can become a sponsor. This is a good option as it gives your business exposure to your target audience.
Finally, you can host an event. While this definitely isn’t for everyone, for those businesses that can put together an industry event, the potential to generate revenue directly from the event, or from the new prospects that come out of it, is hard to dismiss.
Referrals remain a strong acquisition channel for businesses of all sizes. A lot of businesses disregard referrals and instead choose to pursue the ‘flashier’ tactics like Facebook advertising and complicated Google Ads.
That is not to say these channels don’t work, but leveraging existing, loyal customers as a way of bringing in new business is something every business owner and marketer should be doing.
Organic social media is often viewed as a ‘vanity’ channel, something that looks nice but doesn’t impact the bottom line. In fact, 13% of marketers have said social media is a waste of time.
But organic social media can play a part in customer acquisition, provided you use it properly.
Organic social media is a great way to build brand awareness, delight and educate your followers with helpful, branded content and is a powerful channel for showcasing your brand personality. It’s also a great way to leverage your followers to help bring in new customers.
Going viral is considered the holy grail for social media marketers. Having your content shared over and over, reaching tens of thousands of people (or more, if you’re lucky) is a huge win for any brand using social media.
You might not think of SEO as a customer acquisition strategy, but in reality, it can be one of the most effective tools in your arsenal for attracting visitors and closing customers.
Think of it like this: when someone in your target audience is searching for an answer, and that question relates directly to a keyword you want to rank for, wouldn't it be great if your website showed up on the first page of the results? 75% of searchers only ever view the first page of Google, so if you can get yourself on page 1, you'll improve your chances of acquiring customers.
Running Google Ads, for those who can afford it, is an easy way to ‘pick the low-hanging fruit.’ When someone is actively searching for a product or service you offer, Google Ads gives you the chance to get your brand and message in front of them at the crucial moment.
Customer Retention as an Acquisition Strategy
Ever heard the saying "it's cheaper to keep an existing customer than it is to acquire a new one"?
Well, unfortunately, it's true. In fact, in most cases it will cost you 5x as much to acquire a new customer as it will to keep an existing one happy and making repeat purchases.
It's also an unfortunate truth that no matter how great a business is, no matter how much time and effort you put in to building something people love, you will always have to deal with customer churn.
Customer churn refers to the percentage of people who leave your customer base over a given period. For example, if you managed to bring in 100 customers last year, but lost 5 current customers over the same time, your churn rate would be 5%.
It's important to understand your churn rate for a couple of reasons:
- It tells you how satisfied your customers are with you
- Can provide a quick measure of success and trends over time
It's definitely not a perfect metric, and it does have some disadvantages too. For example, it doesn't give you an explanation as to why people leave (you need to go and get this yourself), and it doesn't differentiate between new customers who leave within the time period and current customers who may be leaving after multiple years of being a customer.
But what it should do is motivate you to improve your efforts and delight your customers. Remember, it's cheaper to keep a current customer than it is to acquire a new one.
Customer Retention = Revenue
So why are we talking about the number of customers who leave you, when this guide is about finding new customers? Weel, not only is it cheaper to keep customers, it's usually easier too. It's an overlooked, undervalued approach to customer acquisition that is starting to gain traction as marketing costs continue to soar (looking at you, Facebook and Google).
Remember when we mentioned increasing customer lifetime value as a way to reduce your customer acquisition costs? Customer retention is a perfect example of that. Here's a quick explanation:
Let's assume your average patient is worth $10,000 to you over the lifespan of them being a client, which in this case is 2 years. Let's also assume that it costs you $3,000 to acquire that patient (representing approximately a 3:1 return, which is a good baseline for most businesses).
Now imagine if that customer decides to leave halfway through their lifespan with you - you've lost around $5,000 in revenue. You then need to go and spend another $3,000 to find a new one to replace them (plus you CAC takes a hit!)
So not only have your marketing costs gone up, but revenue has come down.
Here's another example:
Say you are the practice manager at a small, boutique dental clinic. In the last month, you had 20 new bookings, which you've attributed to a Google Ads campaign you ran. After the initial consultation, only 50% of the patients you had booked decided to return for treatment - the other 50% went elsewhere.
Again, with a customer retention strategy in place (for example, a follow-up text or email) you may have been able to rebook some of those patients who left, which would have increased the total revenue that is attributed to the ads campaign.
Happy Customers = Revenue
Most businesses love when customers leave a 5-star review, or refer a friend. Providing outstanding customer experiences should be front and centre for your business because it makes everything else much easier.
When you delight your customers, they become a cheerleader for your business - they tell family and friends, they engage with you on social media, they may even share their story online.
Turning happy customers into promoters of your business is another customer acquisition strategy most marketers fail to recognise, because it's not something they've been trained to think of as marketing. But just like keeping existing customers coming back, keeping happy customers engaging with your business can lead to increased revenue.
Tips for Patient Acquisition Campaigns
Right, we've covered the foundations, let's dive into some of the more specific tactics, tricks and hacks you can use to boost your customer acquisition efforts.
Developing the Right Strategy
You'd be surprised how many times we see businesses missing the mark and not achieving the results they hoped for, all because they started out with the wrong plan.
To set a good foundation, you want to make sure your strategy is all of these 4 things:
- Sustainable. Your initial plans should have a long-term view in mind and ensure you have everything you need to achieve the results you want. For example, if content marketing is something you're interested in, ensure you have the right skills within your team to create great content consistently. This means having great copywriters, SEO specialists, and the right tools in place.
- Flexible. "The best-laid plans of mice and men oft' go astray." Be willing and able to change your plans when it's needed and the situation dictates it. There is value in following the plan, but there is often greater value in changing paths when faced with a fork in the road.
- Targeted. "When you sell to everyone, you sell to no one". It's an old saying but remains true - be particular about who you are trying to reach and convert into a customer as you'll see greater results when you clearly define your ideal customer and focus your efforts on getting your message in front of them.
- Diversified. Last saying, I promise; "don't put all your eggs in one basket". A diversified strategy, incorporating multiple tactics and channels, is more likely to achieve success than a strategy narrowly focused on one area. You also protect yourself from failure - if one channel doesn't work out, you've got other ones to fall back on.
As mentioned in a previous section, the ability to continual optimise is one of the most efficient ways to improve your ability to acquire patients, and to bring costs down.
AB testing should be something every business prioritises, even if it's something as simple as changing the colour of a button on a landing page. Some very common areas you can test are your:
- Website and landing pages - changing layouts, moving items around on the page, and changing colour schemes.
- Emails - subject lines, preview texts, and testing text-only vs image-based body content.
- Forms - how many questions you ask, where it's located on the page, the button colour, and the button text.
Re-Engage Old/Cold Patients
Another way to increase your CLTV is to re-engage old clients to entice them to make a repeat purchase. This is one of the simplest ways to boost your customer acquisition efforts, and something every business should do regularly. Try sending a re-engagement email campaign or SMS to get old patients back in for a new consultation.
Remarketing is when you reach out to audiences who have already engaged with you in some way, usually through visiting your website. You can use platforms like Facebook to retarget past visitors with tailored ads that speak more closely to their experience with you.
This tactic can be a great way to increase your efforts to bring in new patients since you're reaching people who already know you, rather than continually trying to find 'cold' audiences. It's usually a more cost-effective approach and can greatly improve your conversion rates.
Reviews and Social Proof
Gone are the days when consumers would believe every word a business said about themselves or their product. These days we rely so heavily on the opinions of others, especially when it comes to making a purchase. We want to know that what we are about to buy will do what it says it will and that it can solve our problems.
Asking current patients to give you a review, and clearly displaying these on your website, can be a great way to improve your ability to acquire new clients, since you're making it easy for them to trust the opinions of others.
Use Automation and Chatbots
For a lot of businesses, patient acquisition can be costly and time-consuming. When someone is ready to buy from you, it usually requires a bit more effort from you to make the sale, especially if you are a B2B business or selling a high-ticket item such as expensive cosmetic surgery. This added time can quickly increase your marketing costs (remember that your CAC includes ALL the costs of marketing, including the salaries of those involved).
One way to help reduce this cost is to make the most of automation tools, such as automated email marketing and text messaging services. Utilising chatbots is also another great tactic as they can be pre-programmed with responses to commonly asked questions. This can help qualify potential patients before you become personally involved so that when that time comes, you can hopefully spend less time going over details and close the deal sooner.
Improve Your Call-To-Action
When we think of patient acquisition, it's easy to also think about how well we can attract leads in the first place. If you can master the art of persuasive writing, and really nail your call-to-actions across all stages of the buying journey, you can greatly improve your ability to land new customers.
Think of it like this - you visit two websites, one has well-written copy and speaks directly to you and your problems and makes it easy for you to take the next step (through a well-crafted call-to-action), and the other looks great but doesn't make it clear what it wants you to do after visiting the site, which one are you going to progress with? 9 times out of 10 you'll go with the first one with a clearly defined journey and call-to-action. Remember, people don't like making decisions, so try to remove as much ambiguity as possible and simplify their choices.
Improve Your Reporting
"If it can be measured, it can be improved," or so the saying goes. The not-so-secret trick to improving anything is to first understand the problem in detail. This is where accurate, detailed reporting becomes so vital. We speak with a lot of clients who know they aren't getting the results they want, but can't figure out why. Once we set them up with a proper dashboard and clear reports, it is pretty evident where we need to spend time to help them achieve their goals.
Increase your CLTV
The final tip in this non-exhaustive list of tips is to try and increase your customer lifetime value, or the total amount of revenue a customer represents to you over their time of being a customer. When we look back at the ratio of CAC to CLTV, we can see that boosting revenue is a surefire way to improve your metrics.
How you increase your CLTV will vary depending on the type of business you are, who your patients are and what you sell, but some easy things to try include:
- Launch new products and upsell current patients
- Cross-sell new customers to other offerings that complement their original purchase
- Implement a referral scheme where happy customers can bring in new ones
- Increase your prices (be careful with this one!)