PROCUREMENT BY SOURCE 

Accelerate your business with these expert tips on "Procurement by source". Analyse and discover this TIP!

WHAT IS IT?

This is the number of customers/users (depending on the business model) that we have attracted segmented by source, i.e. what it tells us is the volume of prospects that we can potentially convert into customers depending on where each prospect comes from. Source acquisition is a metric that allows a company to analyse in detail how customers and users are being acquired, segmenting the source of origin of each of them. With source-based acquisition, companies can get a more accurate picture of how their customer and user base is being acquired, and focus their efforts on the most effective sources to optimise their acquisition strategy.

WHY IS IT IMPORTANT?

This metric is important because it provides an understanding of customer and user behaviour, as well as the effectiveness of each source in acquiring customers and users. With this information, the company can identify which sources are generating the best results and, therefore, focus its efforts and resources on them to increase customer and user acquisition. The key to any startup is to have an efficient machine to transform stakeholders into customers, and therefore it is key to model the user lifecycle... and this always starts with acquisition. In addition, if we are able to know the number of interested parties attracted by sources, we can get an idea of how each source works.

HOW IS IT CALCULATED?

The calculation of acquisition per source varies depending on the business model, but in general, it is based on counting interested parties per source. In web-based models, for example, Google Analytics can be used to differentiate between referral traffic, keyword search traffic, affiliate traffic, advertising campaigns, among others. In other business models, it may be necessary to ask customers directly how they heard about the company or product. It depends very much on what our business model looks like, but usually it is enough to 'Count' stakeholders per source (in Internet-based models): is easy, as Google Analytics helps us a lot or differentiate between referral traffic, keyword search traffic, affiliate traffic, campaigns...etc.) In other more 'tangible' business models it is often necessary to ask customers how they found us.

Known companies acquisition by sources

Below are some examples of well-known companies and their sources of procurement:

1. Google: Google's main source of acquisition is organic search, i.e. users who search the search engine and arrive at websites via search results. In addition, Google uses online advertising and email to attract new users.
2. Amazon: Amazon's main source of acquisition is direct traffic, i.e. users visiting Amazon's website directly. In addition, Amazon uses online advertising and email to attract new users.
3. Uber: Uber's main source of acquisition is online advertising and promotions for new users. They also use referral programmes to attract new users.
4. Airbnb: Airbnb's main source of acquisition is online advertising and promotions for new users. They also use referral programmes to attract new users.
5. Spotify: Spotify's main source of acquisition is online advertising and promotions for new users. They also use referral programmes to attract new users. In addition, Spotify uses social media integration and personalised recommendation to retain existing users and attract new users.

Practical examples of procurement by source

Here are some practical examples of sourcing in different types of businesses:

1. An online shop: An online shop can get visitors from different sources such as Google Ads, Facebook Ads, Instagram Ads, email, organic search on Google, among others. In this case, the calculation of the acquisition per source is done by taking into account the number of unique visitors coming to the shop page from each source.
2. A professional services company: In this case, a professional services company can obtain clients from different sources such as referrals from previous clients, Google Ads, social media presence, advertising in specialised media, among others. The calculation of acquisition per source is done by taking into account the number of clients that come to the company from each source.
3. A mobile application: In this case, a mobile application can obtain downloads from different sources such as Google Play Store, App Store, ads on social networks, advertising on specialised blogs, among others. The calculation of the acquisition per source is done by taking into account the number of downloads coming from each source.
4. A physical products company: A physical products company can obtain customers from different sources, such as sales in online shops, sales in physical shops, referrals from previous customers, advertising in specialised media, among others. The calculation of acquisition per source is done by taking into account the number of customers coming to the company from each source.

In all of these examples, source acquisition is important because it allows businesses to understand which sources generate the most traffic or customers and to focus their efforts and resources on those sources that are performing best for them.

Case study for an entrepreneur to calculate procurement by source

Let's imagine you are the founder of an online shop that sells beauty and personal care products. You want to calculate the acquisition per source to know where your potential customers come from and to be able to make informed decisions about your marketing strategies.

To do so, you can follow the steps below:

1. Identify traffic sources: First, you should identify all sources of traffic to your website, such as organic search traffic, paid traffic from Google Ads, social media, email and referral traffic from other websites.
2. Use a monitoring tool: Use a web analytics tool such as Google Analytics to track and measure traffic from each source. Be sure to set up conversion goals, such as sales or registrations, to measure the effectiveness of each traffic source.
3. Calculate the number of unique visitors: For each traffic source, calculate the number of unique visitors that have come to your website in a given period, such as a month. This will help you understand the volume of traffic from each source.
4. Analyse the quality of traffic: Analyse the quality of traffic from each source, which means assessing whether visitors coming from each source are making purchases or registering on your website. For example, if the majority of visitors from Facebook do not make purchases, you may need to reconsider your advertising strategy on that platform.
5. Make informed decisions: Use the data you have collected to make informed decisions about your marketing strategies. For example, if you find that paid traffic from Google Ads generates more sales than referral traffic from other websites, you can increase your Google Ads advertising budget and reduce your backlink acquisition efforts from other websites.

In short, source acquisition is a key metric for any business, as it allows you to understand where your potential customers are coming from and to evaluate the effectiveness of your marketing strategies. By following these steps, any entrepreneur can calculate their acquisition per source and make informed decisions about their business.