11 Tips to Lower Your Customer Acquisition Cost (CAC)

11 Tips to Lower Your Customer Acquisition Cost (CAC)

It is sort of clear, no matter community, that the digital house has grow to be a aggressive one for companies. Every firm on the web is vying for the eye of the identical customers (in a technique or one other), making efficient advertising and marketing to your goal buyer increasingly more troublesome. On prime of that, common prices of ppc adverts are growing.

It’s necessary to make certain your techniques and processes for buying new clients through these areas are cost-effective. Aside from working or sustaining completely crafted paid media campaigns, there are a selection of strategies you should utilize to decrease your buyer acquisition prices, or least make that determine maintainable and scalable over time.

So on this publish, I’m going to cowl

  • Define buyer acquisition and buyer acquisition value (CAC)
  • Explain the distinction between CAC and CPA
  • Provide 11 suggestions and ways you possibly can implement to decrease your buyer acquisition value.

What is buyer acquisition?

Just because it sounds, it means the acquisition of paying clients to your small business. However, it doesn’t refer simply to that one motion of clicking “buy” or signing a contract. It encompasses the total path from prospect to paying customer.

For some companies (ecommerce specifically), that path could also be brief in length with few stops alongside the way in which. For others with a longer sales cycle, it may very well be weeks, months, and even years.

Regardless, a buyer acquisition technique goals to make sure that each step within the journey to changing into a buyer is as seamless as it may be, permitting you the best potential conversion charges.

Building out and understanding your small business’s funnel is likely one of the most troublesome issues for any marketer to undertake, significantly if you don’t have the information to assist your choices. We’ll get into that later, however I’d like to additionally overview the distinction between CAC and CPA.

Customer acquisition value vs value per acquisition

One factor we’d like to clarify is that buyer acquisition value (CAC) will not be the identical as value per acquisition (CPA).

What is buyer acquisition value (CAC)?

You calculate your customer acquisition cost by dividing your general promoting spend by the variety of new clients you acquired in consequence. CAC is a very powerful metric when working direct-response promoting campaigns, however in lots of instances, it’s used for measuring the success of your advertising and marketing at a enterprise stage, as opposed to a marketing campaign stage.

how to lower your customer acquisition cost—CAC formula

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What is value per acquisition (CPA)?

Cost per acquisition, alternatively, is extra of a campaign-level metric. CPA is just the fee to purchase a lead (so, anybody however a paying buyer), whether or not by way of a content material obtain, free trial, demo request, or every other submission of contact info with intent.

In the grand scheme of issues, CPA is necessary however the conversion charge all through the funnel is extra so. Let’s say for instance, you’re driving leads for a gross sales demo or session. Although this lead sort could also be thought of very low-funnel, there could also be a big discrepancy between what number of leads convert on this motion and what number of of them grow to be paying clients.

Depending on the character of your small business and gross sales operations, you might give you the chance to sacrifice a better CPA if the conversion to buyer and return on advert spend is excessive. This turns into a vital issue when competing with different companies for useful advert actual property.

customer acquisition cost vs cost per acquisition formulas

As said beforehand, in case you are running ads for ecommerce then the distinction between CAC and CPA could also be minimal as you possibly can instantaneously see whether your ads are making you money.

The first motion a consumer takes might very properly be to go to your on-line retailer and make a purchase order.

How to decrease your buyer acquisition prices

In this part, I’ll run by way of 11 suggestions and ways to enable you decrease your buyer acquisition prices, or on the very least, start to take into consideration how to enhance the general effectivity of your advertising and marketing funnel.

1. Have monitoring in place

I can’t stress sufficient how completely vital it’s to have correct monitoring in place. From advert click on to web site go to, to lead, to buyer, you want to know which visitors is coming from which channel and ideally, which marketing campaign.

Don’t simply ship customers aimlessly to a touchdown web page with out establishing conversion tracking inside every platform first. That’s the place it is possible for you to to get the baseline CPAs and make optimizations within the campaigns themselves.

how to lower your customer acquisition cost—conversion tracking setup screen

Whether you employ particular person touchdown pages or kinds particular to the channel you’re promoting on, or create UTM parameters, it’s important to give you the chance to tie efficiency to particular campaigns. And be certain to set up conversion values so you possibly can join paid promoting spend straight to leads inside your pipeline.

2. Set a baseline

Given the huge variations between companies and gross sales cycles, it might take a while to arrive at your CAC. If leads come into your pipeline however take months to convert to clients, it might seem like you’re within the crimson for a while.

This is why figuring out the baseline conversion charges on your promotions, channels, and platforms is essential. Once you perceive the average conversion rates all through your funnel you possibly can start to precisely predict the CAC.

3. Align your adverts accordingly

Yes, leads acquired by way of a demo request are more likely to convert right into a paying clients than these acquired by way of a content material obtain. But an advert selling a free trial for a mission administration platform will not be going to carry out properly for customers merely in search of mission administration suggestions or templates. In this occasion, it could make extra sense to promote a free information or template. You can then create retargeting adverts for incrementally lower-funnel affords based mostly on who’s partaking with every previous advert.

The level is, some companies assume they’ll goal prospects with bottom-funnel promotions fully and drive scalable worthwhile returns. Although this may work for some, most will discover their conversion charges plummet and buyer acquisition value (CAC) skyrocket. Keep your buyer acquisition value low by spending on affords almost definitely to convert at every stage of the funnel.

how to lower customer acquisition cost—offers at each stage of funnel

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For tips about doing this by way of Facebook adverts, take a look at these 5 Steps to a Conversion-Driven Facebook Ads Sales Funnel.

4. Have a transparent path to conversion

I might have named this part “optimize your funnel” however doing so would oversimplify the purpose I’m making an attempt to make. The larger framework of the advertising and marketing funnel contains the minor elements of promotions or offers.

In addition to ensuring your affords align along with your customers’ stage within the funnel, you also needs to make certain your subsequent affords align with the trail they’re almost definitely to take. For instance, the highest of your funnel might comprise content material downloads, nevertheless, you will have a number of totally different items of content material. It’s necessary to strategize that content material and align it with the target market, their wants, and guarantee there’s a direct path to gross sales from that conversion.

And then, be certain to strategize your subsequent affords. Leads that obtain information A could be taken with a unique retargeted advert supply than leads that downloaded information B, or who used your free instrument.

how to lower customer acquisition cost—top of funnel vs middle of funnel ad

Create considerably gradual, however clear, paths to conversion based mostly in your gross sales cycle and the supply that acquired the lead. This approach you possibly can keep away from drop offs in conversion charge from lead to gross sales. For instance, a content material obtain loosely related along with your services or products will want a number of extra mini conversions earlier than they convert to a buyer. You need to strategize each layer of your advertising and marketing funnel to align completely with directing the prospect in direction of gross sales, on the proper tempo.

5. Use touchdown pages

Now, there are methods to increase conversion rates without touching a single landing page, however this isn’t supposed to be your total technique.

I nonetheless see many people not utilizing them. In different phrases, they create advert campaigns that ship people straight to their web site in hopes that prospects will convert there. Even you probably have a conversion-optimized website, I counsel in opposition to this as a result of there are too many choices in your web site that may (and can) distract the consumer from changing on the motion you’re focusing on along with your advert.

Create touchdown pages particular to the affords in your adverts in order that the one CTA on that touchdown web page is the motion you need them to take. And right here you possibly can embody necessary particulars in your landing page copy to handle any hesitations, convey your worth proposition, and get extra conversions.

6. Optimize your web site and touchdown web page expertise

One of the commonest discussions for many years at this level is the web site expertise. Books, articles, movies, and webinars have all mentioned the necessary roles your web site performs within the grand scheme of changing prospects into clients.

First, there wants to be full continuity between your advert and touchdown web page (study extra in our landing page tips). The copy and imagery ought to feel and look the identical and talk the very same message.

example of continuity between ad and landing page

There must be no dissonance between these two elements. The advert ought to align completely with the web page that customers are being directed to. This is likely one of the best methods to increase conversion rates and decrease your buyer acquisition value.

As far as internet pace goes, it’s best to guarantee your web site doesn’t take too lengthy to load and is well navigable. Regardless of whether or not you’re utilizing a touchdown web page that’s hosted on one thing like HubSpot or Unbounce, many people will need to browse your main website earlier than making any purchasing decision. You can learn how to optimize your page speed here.

7. Get into the weeds of conversion information

Whether it’s by way of taking a look at Google Analytics information or the conversion info offered inside the promoting platforms (YouTube Studio may surprise you), it can be crucial to perceive as a lot as you possibly can in regards to the conversions happening, equivalent to:

  • What time of day
  • Which day of the week
  • Which units

If you discover that almost all of your leads convert by way of the time window of 9AM to 5PM Monday by way of Friday, schedule your ads to solely run at these instances to get essentially the most out of your advert spend and decrease your CAC.

how to lower customer acquisition cost—conversion action data view

If you see that desktop customers are costlier to purchase however are a lot larger in high quality, then it’s best to enable your self to spend extra to purchase these customers and get rid of or separate cell customers fully.

Get into the weeds in your conversion information so you possibly can spend extra solely the place and if you want to as an alternative of accelerating prices general and losing spend.

You can even verify to see when you’re losing spend with our free Google Ads Performance Grader.

8. Check your placement settings

There are a number of layers to an effective paid ad strategy that might warrant a number of weblog posts, however lots may be achieved simply by paying consideration to the main points of how your campaigns are arrange. The first detaili to verify is, on the Facebook or YouTube aspect of issues, the placements you’re focusing on. For instance, many companies will run direct response campaigns whereas having the setting for “automated placements” enabled on the advert set stage:

how to lower customer acquisition cost—check placement settings

This will mechanically embody the “Audience Network” which is able to serve your Facebook adverts throughout varied app properties.

In my expertise, the Audience Network has traditionally pushed very low-quality clicks and few, if not any, conversions. Although Facebook’s algorithm is engineered to ship essentially the most outcomes for a selected aim as potential, oftentimes there can be an excellent quantity of wasted spend on the Audience Network placement.

You can verify to see when you’re losing spend with our free Facebook Ads Performance Grader.

9. Check your location settings

Another good instance of marketing campaign settings that may affect CAC is the location targeting in Google Ads. When going by way of your search marketing campaign’s setting you’ll discover a piece for places:

how to lower CAC—location targeting view in Google Ads

If your small business wants to serve adverts to people inside a particular location, increase the places tab and choose “individuals in or usually in” your goal space, and make exclusions as wanted.

how to lower CAC—geotargeting settings in google ads

Many instances, a few of the smallest particulars inside the setup of a paid advertising campaign can have the largest affect on the quality of leads that you just drive by way of it—and in the end, your CAC.

10. Use bidding methods

The final part of paid promoting that may affect your buyer acquisition value is your bid technique. Leveraging bid strategies (inside Google and Bing not less than) can vastly enhance your base CPA and subsequently your CAC. With campaigns which have had sufficient conversion information, I’ve discovered Target CPA bidding as an efficient technique for sustaining common prices for paid search campaigns.

(*11*)

Of course, there are a lot of components and layers to the funnel deeper than the prices on the prime however it’s best to benefit from any approach you possibly can enhance these metrics. Take into consideration the viewers (or key phrase) and funnel/promotion when making choices on how aggressive you have to be.

11. Create nice content material

You can’t escape it. Marketing success all the time comes down to content material. The guides and collateral you produce, their touchdown web page copy, the ad copy that promotes them (and different non-content affords). If you need to decrease your buyer acquisition prices, you’ve bought to write copy that sells.

How to decrease your buyer acquisition value [recap]

As you possibly can see, for companies with an extended gross sales cycle, reducing buyer acquisition value (CAC) requires increasing conversions and reducing the price of these conversions (CPA) all through your total funnel. In this publish, we’ve offered 11 methods to try this:

  1. Have monitoring in place
  2. Set a baseline
  3. Align your adverts accordingly
  4. Have a transparent path to conversion
  5. Use touchdown pages
  6. Optimize your web site and touchdown web page expertise
  7. Get into the weeds of conversion information
  8. Check your placement settings
  9. Check your geotargeting settings
  10. Use bidding methods
  11. Write nice content material

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