3 Ways to Improve Customer Acquisition Cost (CAC)

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As marketers, we often focus on the value and return of individual channels, and talk about things like CPA and ROAS. But let’s take a step back for a moment. Thinking more holistically, let’s look at the total sales and marketing cost required to earn a customer. That’s CAC, or Customer Acquisition Cost. 

The lower the CAC, the more efficient and effective marketing and sales programs are. 

If you’re not yet looking at marketing and sales costs this way, you may want to, as it’s a popular metric among executives and investors.  

Here are 3 surefire ways to improve your CAC.

#1 CRO Conversion Rate Optimization

CRO helps you identify and remove any barriers that prevent valuable traffic from converting. Make sure it is easy for your site visitors to convert into leads, or to convert into customers, or make purchases on your site.

Questions to consider:

  • Is your site optimized? 
  • How does your mobile form fill work? 
  • How easy is it for me to buy on your site — are there a lot of hoops that even you wouldn’t jump through? 
  • Is the website copy uber clear and has it been tested? 
  • Aim for “no friction” during the sales process so you can go for the gold. 

You can also set up goals in GA to drill deep into the shopping cart abandonment rate, diagnose how your landing pages are performing and better evaluate your site performance

Quick Tip:  Run a site speed analysis on the 5 top landing pages on your website, identify a couple of to-dos, and put them on your website development priority list. Site speed has a big impact on how well users engage on your site.

#2 Maximize your current customers

It’s just good business to ensure that you are keeping current customers happy, loyal, and coming back. 

  • Improve re-purchasing among current customers (and lower overall CAC), by offering an upgrade or something new that they will want to try. 
  • Maybe you have a new product coming down the line — consider offering it to current customers first for that ‘special customer’ feeling and increase in purchase rate.
  •  If you can’t currently offer customers something new, take steps to improve customer retention. You don’t want ‘leaky bucket syndrome’ — spending budget to obsessively acquire new customers while current customers are ‘leaking’ out of the bottom of the bucket. If you need ideas on how to how to maximize current customers, hit us up.

A few areas to look at:

  • Identify who your best customers are, and not just based on revenue. Dig deeper and look at the profitability of your customers. 
    • Looking at customer profitability can help you recognize problems in product pricing, sales approach, marketing methods, and more. 
    • You may notice certain salespeople tend to bring in greater (or fewer) profitable accounts; you might find similarities between your most profitable customers that help you target more of them. 
    • This is especially beneficial if a significant chunk of your company’s revenue is generated by a small number of customers.
  • RFM Analysis (Recency, Frequency + Monetary Value) – Look at your  entire customer base to identify new customers, champions, and even those who are at risk of churn. 
  • Retention Rate – Understand what your current retention rate is, identify where you may be losing current customers, and work to close the experience gaps that are creating churn.

#3 Evaluate your current customer acquisition strategy by channel

All channels are not created equal. The more robust your analytics, measurement, and testing, the better your CAC will be. It’s worth the time to invest in going beyond the basics. For example, have you reviewed your attribution model recently? At Two Octobers, we find a position-based attribution model works best across a range of business types, and is generally more accurate than the default last-click attribution model.

If you want another brain to bounce this off of, take advantage of our complimentary 20-minute consult here or one of our analytics training programs.

Serin Silva

Serin Silva

Serin Silva is a veteran marketing strategist at Two Octobers. Learn more about Serin

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