The biggest challenge any company faces is finding new leads and acquiring customers. What makes things even more tricky is that a business cannot survive without people who are going to become its loyal clients. Given the importance of customer acquisition, it can often be quite costly. Moreover, if what a business expects to earn from an average customer is low, the high customer acquisition cost turns into a serious concern. Therefore, continuously deriving new ways to reduce the said cost can have a positive impact on the company.
What is customer acquisition cost?
Simply put, customer acquisition cost (CAC) is the amount of money a company needs to spend to get a new customer. It usually includes advertising, marketing, and sales costs which are then divided by the number of customers that are acquired. CAC = Total Sales & Marketing costs / Number of customers acquired
How to reduce CAC?
While implementing top-notch marketing campaigns and investing in quality outreach is essential to business success, cutting down costs when appropriate can be equally important. A number of strategies can help you reduce CAC in simply ways.
1. Focus on your target audience
You can’t sell to every single person out there, simply because it is unsustainable and doesn’t generate the right outcomes. By creating buyer personas and better understanding who your perfect customers are, you will know how to engage and communicate with people who are interested in your business. A personalized experienced coupled with high-level assistance is a perfect formula for happy customers. You can also lower your CAC by making the browsing and buying processes much more convenient.
2. Boost customer retention
Your current customers are likely to buy from you more than new customers, and there’s a very straightforward reason for that: it’s much easier to convince your existing customers that your offering is great and would make a difference in their lives than people who have not become familiar with your company yet. Customer acquisition cost can be drastically reduced by increased repeat customer rate, average order size, and the frequency of purchase. Therefore, you should put huge emphasis on customers that already love your products or services and encourage them to purchase more.
3. Utilize A/B testing
The landing page is a key component of a well-performing website whose overarching purpose is to attain new customers and boost sales. You should A/B test your landing page and specific parts of it to see if certain placement of call-to-actions (CTAs), headers, or text blocks leads to better results. It’s reasonable to play around with product titles, buttons, forms, layout, and many more elements that make the said page stand out. You should keep in mind that making drastic changes to your website could potentially make some visitors angry, hence, the changes you make have to be carefully thought out and implemented competently.
In addition to these strategies, you can also create quality content, use affiliate programs, and automate marketing to save time on repetitive tasks. These and more ways to reduce customer acquisition cost can make a huge difference for your business.
