9 Ways to Reduce Customer Acquisition Cost

customer acquisition cost

Customer acquisition cost is the cost that is incurred by the company in the process of acquiring a customer. For a website or an app owner, it is important to keep customer acquisition cost on the lower side to continue being relevant in the market and keep generating revenues.

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Reducing the cost of customer acquisition (CAC) is a matter of strategic thinking and analysis. You need to understand all perspectives of the business to detect procedures that can be executed without enormous spending.

To reduce CAC, first, you need to be able to calculate it. Then, you can step forward to set your CAC reducing strategy accordingly. Take a look at the following for customer acquisition cost of a business organization:

Customer Acquisition Cost (CAC) = Total marketing cost / # cost of a customer acquired

How to Reduce Customer Acquisition Cost (CAC)

There are countless of strategies you can implement to lower your customer acquisition cost. Here are the following nine strategies to cut down your customer acquisition cost:

Targeting Right Audience for Product & Service

The better you define your target, the more chances you have to reduce your overall acquisition cost. All you need to do is to define your target as soon as possible. Once you have defined your end niche users accurately the next step is to create a buyer persona that matches your target. Buyer persona is simply a model of your ideal, perfect customer. Once you’ve done this, shape all your marketing efforts around this persona.

Re targeting is the underlying phase of targeting process. Think about the user that visits your website but doesn’t complete the action that you want from him/her. Re targeting is stands for this kind of scenarios. You shouldn’t underestimate the possibility of a visitor to become your regular niche.

Adopt Personalization to decrease customer acquisition costs

Conduct a market research of target industries and know the pain points of target audience. Personalizing your emails can result in 26% more opened messages, while segmentation can yield 760% more revenue.

The other efficient way to improve your conversions is to re target inoperative users via established marketing collateral like email marketing. The key to persuade and convert them would be analyze what made them to win their engagement again. You need to pay more attention to your email content, subject lines, CTA’s and layouts.

Marketing Automation Reduces Errors & Reduces CAC too

Marketing automation grows your business in various subjects like lead generation, purpose of email marketing, analysis of customers’ interests and overall marketing report generation. With the help of automation, you can speed up a process that requires manual efforts. So, we can say that if you use marketing automation right; it can be huge time and cost saver.

Companies that go with automation see an increase in revenue quickly. As you guess, increased revenue means lower CAC. Having a strong lead nurture workflow can help convert those leads into paying customers.

Pay Attention to Customer Retention

If you focus on acquiring users, you need to pay attention to customer retention metric as well. Customer retention is simply the metric that is used to count customers and track customer activities. That’s the point; acquiring a new user is much more expensive than keeping existing one. And tracking customer retention metric rate is important to keep users that you already have.

To increase your retention rate, you need to adopt a more mature approach, and focus more on building better customer experience to strengthen customer relationships rather than up selling and cross -selling your products/services randomly.

Content marketing too helps in Reducing CAC

The more attention your content gets, the lesser your company has to spend on paid ads during the customer acquisition periods. To build content that is relevant to the needs and interests of the target audience you can use long tail keywords.You can also use keywords which adhere well to the buyer’s persona of your end users.This strategy helps you build an organic and credible audience without selling out money on ads.

Define your USP clearly

Unique Selling Proposition, USP in short, actually explains why your product & service is different from similar brand stands for. If you launch your offering without specifying its uniqueness, then your product/service will be undifferentiated and unattractive to potential users. Your USP is the single reason why and how your niche is better than the competition’s, and also precious asset to motivate your users. There by reducing your customer acquisition cost.

Capitalize on messaging app users to reduce customer acquisition cost

A recent report states that messaging apps worldwide have an average of 5 billion users and more than half of all people would prefer to contact a business via text than through phone or email. Chat bots are AI equipped tools that will help you capture leads and interact better with your users and acquire more customers for your product / services.

A/B Test Your Landing Pages

An A/B landing page test helps you test two variants of your landing page. Based on Google Analytics data around bounce rates and exit pages on your landing pages, a test like changing a button colour or call-to-action text can have an incremental impact on your conversion rates, which directly impacts your CAC.

Beat the Churn

Customer churn is defined as the group of individuals who make a single purchase from a retailer and then never come back – and this phenomenon can be deadly for businesses since it’s six to seven times more expensive to acquire customers than retain current ones. Instead, by considering current sales patterns and available services, businesses can determine whether they’ll thrive by expanding offerings or emphasising referral services.

Conclusion

Estimating Customer Acquisition Cost is necessary for every business owner. When you know your current Customer Acquisition Cost, you can formulate efficient ways to reduce the price of new customers through strategies mentioned above.