It’s hard to deny the old saying that nothing in life is free. And it couldn’t be more true for business owners. While we would all love to just have a constant stream of new customers find us all on their own, there’s always a bit of money that needs to be spent in order to acquire a customer. It’s what is referred to as the customer acquisition cost.
The customer acquisition cost, often referred to as CAC, is the cost of your marketing efforts and sales that’s used to persuade a person to make a purchase with you. The factors include creative, technical and publishing costs. It’s calculated by dividing the marketing and sales cost by the number of new customers you’ve gained in a specific time frame.
Even though the customer acquisition cost is essential for profit and growth, we’re always looking for a way to save a few bucks. If you’re trying to lower customer acquisition cost, there are a few strategies worth testing. That’s what we’re here to discuss.
5 ways that you can reduce your customer acquisition cost
The CAC can vary from industry to industry; regardless, you’re likely to spend a couple hundred dollars on convincing a person that they should become a customer of yours. While you shouldn’t skimp on your marketing efforts in order to cut costs, it can always be beneficial to test out different strategies that accomplish your desired outcomes while still being kind to your budget.
Here are five strategies to lower your customer acquisition cost:
- Focus on organic marketing — While paid ads can help you catch the attention of prospective customers, their cost is always going to be higher than organic. Not only is organic marketing more cost effective, but it can provide longer-lasting results. Be sure to incorporate organic marketing tactics into your strategy, such as search engine optimization and content creation.
- Start a referral program — The value of word-of-mouth marketing should never be underestimated. Trust in your company and your customers enough to believe that your work speaks for itself. Try testing out a referral program that encourages loyal customers to recommend your products or services to others in exchange for a reward. For example, if a person uses a specific referral code at checkout or tells you that a friend talked about your services, you can give a discount to both the new and referring customer. This improves customer acquisition while deepening customer loyalty.
- Optimize low-performing efforts — Whether it be for a social media post, a blog post or a paid advertisement, tracking analytics is essential for an effective marketing strategy. If you’re trying to lower your customer acquisition cost, try looking at the analytics for past efforts. See how you can optimize low-performing campaigns as opposed to putting money into new ones. This can mean anything from repurposing content for new formats to adjusting the call to action on a social media post.
- Focus on high-traffic avenues — There are potential customers in every marketing avenue, from podcasts to YouTube. It’s important to funnel your money into the ones that have the best analytics. Instead of spreading out your customer acquisition cost into every possible avenue, focus on the ones that have the highest engagement and conversion rates. This can decrease costs by reducing the quantity of your efforts while maximizing quality.
- Don’t disregard customer retention — Focusing on customer retention will have a positive effect on your customer acquisition cost. It’s important that you take note of how your customer lifetime value compares to your acquisition cost. The value should be at least three times the acquisition cost. It costs less to market to an existing customer than a prospective one. Marketing for customer retention can include asking for feedback through social media and sending email newsletters.
At BURG+CO., we’ll collaborate with your team to determine the strategies that will be the most effective for lowering your customer acquisition cost while improving other vital analytics, such as lead conversion rates.
Want to attract new visitors to your website while lowering your customer acquisition cost? BURG+CO. can help
Increasing traffic to your website plays a role in increasing conversions and leading to new clients. However, it’s difficult to attract visitors to your site when you don’t know what to do. Fortunately, this is what we specialize in at BURG+CO.
Our team has years of experience in helping businesses improve their digital presence to attract new leads and retain existing ones. If you’re looking to perform better in search engine results and attract more visitors to your site, we’re ready to talk to you to see how we can help. Contact our team today for more information about digital marketing or to schedule a complimentary consultation.
