How To Reduce Customer Acquisition Cost (CAC)

In my previous article, I talked about the importance of adding CAC metric to your marketing mix. In this article, I will share some tips to reduce your CAC to have more profitable customer acquisition channels.

There are a few things you can do to lower your CAC, but here I will talk about the ones I find it most useful.

Clearly Define Your Target Persona

It’s essential to know whom you should target with your marketing activities. If you can define your target clearly, you can have a more accurate shot at marketing activities. Clearly defining your target persona will make your ads seen by the relevant people. Therefore, your cost per click would decrease.

All you have to do is research about “who would be your perfect customer?”. Write down all of your findings, and you will have your target persona. Next step is to shape all your marketing activities around this persona.

Closely Watch Retention Rate

Growth comes from acquiring more customers, and this is the sole purpose of every marketer, but customer acquisition numbers alone won’t be enough. It would be best if you focus on retention rate as well. If you spend tons of money on acquiring users to see them stop using your app after a week, then you should be focusing on retention rate to see whether your newly acquired users will continue to use your app after the initial experience.

Keeping your retention rate has an impact on your CAC because longer the customers stay in your app more lifetime value you will get from them.

Automate Your Marketing Activities

Your customer acquisition costs consist of the wages for your sales and marketing teams. The fewer people you have in sales and marketing departments fewer expenses you will have, and this will have a direct impact on your CAC.

With the help of the automation, you can empower your sales and marketing teams to make them more efficient and faster. Automation helps your employees to do more in a shorter amount of time, and this allows your company to do more with fewer people. If you can reduce your headcount with the automation, then your customer acquisition cost will go down due to having less marketing and salespeople.

Don’t Skip The Inbound Marketing

Content marketing is one of the best ways to gain customers without spending much. You probably heard “content is the king” and it sure is!

Creating great content is an organic marketing effort which allows you to gain leads without spending money on ads. To have an effective content marketing strategy, you need to make some keyword research on top of that you should know what kind of content your target persona is interested in.

Try to write blog posts to solve the problems of your target audience. When you are creating content make sure that it’s value adding. You should see your blog posts as a startup they should exist to solve a problem just like how startups do.