Customer Acquisition Costs (also referred as CAC) means the total cost required or money spent to acquire a new customer. This cost will generally consists of the amount spent on marketing campaigns and advertising costs. Customer acquisition cost (CAC) is the total sum of the costs divided by the total number of customers acquired.
Customer acquisition is essential to the profitability of the business. It’s quite common for companies to post losses when spending heavily on customer acquisition. On the contrary, efficient spending on CAC could prove to be effective and generate new and promising customers for the business.
Acquisition costs vary immensely across business sectors. However, it’s important to analyse these costs and keep them to the minimum. Let’s have a look at some ways to reduce the CAC:
1. Prioritise Your Audience :
Focusing on the appropriate set audience is essential to reduce the costs as it utilises your cost on specific set of people. For instance, a user that has already registered on your website may not benefit from content targeted at new website visitors and thus you should not be targeting that user when your campaign objective is new customer acquisition.
2. Retarget Prospects :
Re-marketing to people who visited the website from an initial outreach is relatively inexpensive and is highly productive. Sometimes, a gentle nudge in the right direction can encourage the customer to complete a purchase they may have left behind.
In order to retarget your website visitors, you need to understand your customers behaviour, preferences, motivations, etc. You need to make use of this data to retarget the website visitors since the probability of them registering on your website or buying your product is quite high as compared to a user who doesn’t not know your brand.
3. Optimise Your Website for Conversion :
Driving traffic to your website is not good enough if your website is not good enough to convert your website visitors into paying customers. It is of utmost importance to have converting website to improve your visit to sales ratio, thereby reducing your CAC.
You should analyse your customer’s behaviour, identify reasons why they drop off, when they drop off, look at user feedback, etc. and use this intelligence to optimise your optimise on an ongoing basis.
A good user experience is a must for a high converting website and cannot be ignored at any cost.
4. Affiliate Marketing Programs :
Affiliate marketing can be a great way to control your CAC in the long run. Affiliate partners use their influence to engage with possible customers and incentivise them register or make a purchase on your website, and charge you a nominal fees for the same.
A good affiliate marketing program can help reduce your CAC because you only pay affiliates percentage-based commissions after customers makes a purchase from your website.
You should try and leverage all the above mentioned activities to optimize your customer acquisition costs in the long run and make your business profitable.