Reducing the Customer Acquisition Cost for Your Small Business

by / ⠀Entrepreneurship Finding Customers / July 23, 2021
Customer acquisition cost is a line item with which every small business owner must reckon, but it's better to spend smart than spend more.

Customer acquisition cost can be an expensive line item for any small business. Reducing that cost can prove to be a long and winding road. However, only by reducing it can you take a step towards your continuous growth.

If acquiring a customer costs more than the value they bring, it’s ultimately a losing proposition to acquire them in the first place.

Before exploring the costs of customer acquisition, you might want to explore what your business actually needs — customer acquisition or custom retention — as these are two very different things. Once you get an insight into how much customer acquisition costs, you can create a strategy for cutting them down.

What is the customer acquisition cost, and why is it important?

The customer acquisition cost is the approximate cost of gaining new customers. Simply stated, it’s the money you spend on converting your prospects into customers that want to buy your product or services. As there are many different ways to gain new customers, this cost can vary.

It includes the entire expenditure you make, including the tools you use, marketers’ salary, advertising cost, salespeople’s salary, and so forth. Customer acquisition cost is important because it tells you how much your customers are worth.

If you are not sure whether you spend too much of your time trying to make your leads convert or invest much effort into managing channels that don’t seem to help you get many leads, customer acquisition cost (CAC) optimization can help you.

There are many different channels that you can use to acquire leads, and the most popular channel is a direct search on Google. While many business owners decide this is the only viable solution, and go with affordable link building services, that’s not the only solution to improve your CAC numbers.

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On top of this, CAC optimization will give you insights into which social media channels work for you and which don’t. To help you find the right strategy, listed below are the four best ways to keep your customer acquisition low.

1. Focus on your buyer persona.

Determining your user personas and their journeys can be helpful in this process. Take some time to clearly define your buyer persona, as this will enable you to create the right messaging you want to use to position yourself on the market.

Also, try to focus on the low-hanging fruits of reducing your CAC. For instance, while eTV advertising is expensive, online ads can be much more effective. A well-optimized website is an ultimate asset to show your potential customers that you care. It’s generally best to work with professionals, so give some consideration to hiring a top custom web design company.

2. Increase your conversion rate.

Focus on how much of your traffic converts into paying customers. Create a team of people who will do A/B testing, a well-known method you can use to compare two techniques and see which works and yields better results.

Did you know that only 52% of businesses test their landing pages to improve conversions? You will want to constantly test so that you would know whether you are on the right track. And there are many things you can test here, such as landing pages, emails, testimonials, structure.

The other way to do A/B testing is to retarget potential customers and draw their attention through emails. A/B testing can be daunting and time-consuming. However, most reliable digital marketing companies can come up with actionable advice so that you achieve the best results.

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3. Make the most of social media.

Here’s the good news — you can leverage social media to reduce your CAC budget significantly without spending a dime. How? By joining groups on various social media platforms, participating in discussions, and posting about your business and brand. This way, you build your brand awareness, increase your visibility and build a community of people around your brand.

Most marketers consider social media the ultimate tool for decreasing customer acquisition costs.

Overall, social media can be very cost-effective, and most marketers consider it the ultimate tool for decreasing customer acquisition costs.

4. Automate wherever you can.

Automation can be really helpful as it allows you to speed things up and make all processes more efficient and productive. One way to leverage automation is to create a welcoming email and send it to everyone who visits your page or signs up.

Also, you can send a thank you email to anyone who provides any feedback. Plus, you can even offer promotional codes and discounts to anyone who endorses your products or services or even attracts new customers.

Automation is usually very quick and easy, allowing you to save a huge amount of your money and time. In addition, it improves analysis and reporting, lead generation, email marketing, and so much more.

Takeaways on Customer Acquisition Cost

No matter how amazing your product or service is, you’ll achieve success only as people find out more about it. By using the techniques listed above, you can reduce your CAC and get on the right track.

Keep in mind that we’ve only scratched the surface here as there are many other techniques you can experiment with and see which works best for your brand.

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Related Post: Customer Care: Developing Mutual Understanding

About The Author


Steve Hawky is a marketing specialist that focuses on driving business through digital, visual, and content marketing techniques, currently based in Los Angeles.


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