8 Ways to Reduce Customer Acquisition Cost (CAC)
What is CAC in Marketing?
Customer Acquisition Cost (CAC) is the cost related to acquiring a new customer, i.e. CAC refers to the resources and costs incurred to acquire an additional customer. Customer acquisition cost is an imperative and widely used metric in marketing as a way to measure the success or failure of your campaigns.
How to calculate CAC
- Marketing Expenses: spending on advertising and marketing
- Number of New Customers: Total number of customers acquired during the advertising lifecycle.
What is a good CAC?
It is difficult to know if you have a good customer acquisition cost, as only through benchmarking will you be able to have a comparative reference. We found some CACs online and we leave them here for you to compare (source: Startuptalky):
Customer acquisition cost varies across industries due to a number of different factors – including, but not limited to:
- length of the sales cycle,
- purchase amount,
- frequency of purchase,
- customer lifetime and
- maturity of the company.
How to lower CAC
If you notice that you have a CAC way above what you project, you can always benefit from the following strategies to keep your customer acquisition costs low:
1. Having the right audience
It is important to use marketing strategies and resources for the right audiences. Describe the target audience you think will benefit from your product or service.
After that, it will be easier to interact with them. A user who has already subscribed to your site is a good target for email marketing or specific campaigns for subscribed users (we recommend these 4 tips to sell more through email marketing). And by the way…
Retargeting is a useful tactic for businesses that want to maintain a presence in front of potential customers.
Users often leave incomplete actions on websites and apps. Customers choose not to buy from a company for a variety of reasons. Sometimes a little push in the right direction can encourage a customer to complete a purchase they left behind.
3. Improve customer retention
Customers who happily invest in your products tend to spend more than new customers. On average, recurrent customers spend 67% more. It’s easier to convince existing customers of the value a company offers than it is to convince new customers who haven’t yet interacted with your company.
4. Create content and evaluate its effectiveness
By providing meaningful content, you can educate customers and build trust in your brand. However, the content does not always perform as expected. Evaluate the performance of your content against your strategy. Check the tone of your content, focus on features and benefits, and deliver clear CTA phrases. Test different possibilities that will make your content perform well and decrease the CAC.
5. A/B testing and page optimization
A/B testing helps a company discover what its customers want to experience. Optimizing a website’s landing pages can include A/B test product titles, forms, buttons, layout and more. A/B testing allows companies to see how small changes can affect click-through rates on their websites.
6. Improve your sales funnel
An effective sales funnel helps businesses efficiently manage a customer’s buying process. The funnel is like a company, it guides customers from becoming prospects to growing into paying customers. A great sales funnel provides a lot of information and gives the company insight into what your potential customers think.
7. Marketing Automation
Reduce customer acquisition costs by using marketing automation in conjunction with CRM tools. Marketing automation already reduces costs because fewer team members need to focus on mundane tasks.
8. Create strong Google Ads campaigns
A good example is using targeted keywords, ad text and landing pages. For example: if you are promoting a free trial version of a CRM, a good keyword to use would be “crm free trial” instead of just “crm”. Your ad text must mention the words “free trial” in the title and description text, and your landing page must also have “free trial”. You might be interested in our article on how to use negative keywords to improve campaigns
Reduce CAC with information on consumer behavior
Improving marketing efficiency is all about identifying the most important moments to reach consumers and eliminating non-essential marketing spend. If you can understand your target audience’s online behavior and lock them in until the end of their purchase path, then you’ll naturally lower your cost of acquisition.
For insights to understand your target audience at the most important moments, request a free demo of Amplifier now. Contact is free – just fill in your information in any form on our website, and you can start selling more and lower your CAC – we’re experts at it!