Innovative SEO: Inbound Marketing Blog

The Digital Revolution in Customer Acquisition: Lower Costs, Better Results

Acquiring new customers is critical to business growth, but it can be expensive. So, lowering the cost of each customer acquisition might lead to more profits for your organization. However, every company’s primary concern is to develop innovative ways to grow sales and revenue, and as a result, salespeople sometimes overlook the importance of limiting the CAC.

But, can you always be happy with the increased number of customers?

The simple answer is No.

At times, retaining existing clients is more beneficial to the firm than acquiring new ones. Therefore, going slowly and wisely, knowing the necessity of CAC while turning more heads of prospects, is critical. Moreover, CAC also plays a vital role in the sustainability of any business.

Whether you are working on branding your product or improving performance, According to Marketing Metrics, selling to an existing customer has a success rate of 60-70%, whereas selling to a new customer has a success rate of only 5-20%! And, if your new prospects are won at high CAC, the company’s profit will indeed be slashed.

If so, how can we make sure to increase the number of customers at a minimal customer acquisition cost?

Before jumping to these 7 steps, let’s look at how companies like Dropbox & Airbnb did it.

• Dropbox: Dropbox reduced CAC by 60% by leveraging referral marketing. By offering incentives for successful referrals, Dropbox was able to acquire new customers at a lower cost and reduce CAC.

 

• Airbnb: Airbnb reduced CAC by 50% by using a combination of SEO, PPC, and content marketing. By optimizing their website for search engines, they were able to increase organic traffic and reduce the cost of paid advertising. Additionally, by producing valuable, informative, and relevant content, they were able to establish themselves as a thought leader and reduce the cost of acquiring new customers

So, how can we identify such opportunities to reduce customer acquisition cost for your client or our business?

Here is 7 step strategy for customer acquisition cost (CAC) optimization.

1) Define your target audience

Using the power of social media and the web, it is imperative to understand your target audience precisely before defining any marketing strategy. First, jot down the characteristics of your TA, like age, gender, interests, geographical locations, device and platform preferences, etc., and use these data to align your advertising campaigns. Next, decide the ideal platform for promoting your products along with the right way of communication, giving a clear idea of the product’s characteristics. Thus, targeting the right audience, layering it with retargeting, and providing the exact information can make the most of the marketing efforts to lower your customer acquisition cost (CAC).

2) Deliver the right message in the right way

Spreading the right message pertaining to your product means talking about your USPs, using compelling calls to action, and also critical features of your products. Make sure to present all such information attractively on the page where you will land your visitor. This increases user involvement and relevance, ultimately lowering the customer acquisition cost and converting the prospect sooner.

3) Working on leads to convert

A crucial point missed by most marketers is working on the leads immediately, which may be in an hour or two. Let’s not forget that we are competing with a myriad of our peers who are ready to grab the attention of prospective clients while we are busy elsewhere. Moreover, if your representative is going to take this lead forward by a call or an email, ensure he/she is all aware of the product traits and USPs.

Certain tools in the market also help you sift your leads and bring the more prospective ones to the surface. Such tools are life savers, mainly when a company gets too many leads and needs to decide from where to start identifying higher chances of conversion. Lead scoring, Lead Nurturing are popular amongst the markers to bring the MQLs forward and push it to the sales pipeline.

4) Win in the race of word-of-mouth publicity

Do everything you can to foster word-of-mouth marketing initiatives as a business. In the era of digital media, people are vocal about their experiences on these platforms. By keeping an eye on what your users are talking about your products/services on these platforms, you can turn the table on yourself, leveraging them. According to Dimensional Research, reviews influence nearly 90% of consumers when making their own purchasing decisions. So, they’ll naturally want to collaborate if they hear good things about your company. Influencer marketing is one of the best ways to lower your customer acquisition cost in the long run if you are dealing in B2C. B2B is mostly driven by speaking engagement and establishing topical authority.

“72% of customers will share their good experiences with others.”- Salesforce

5) Use targeted paid advertising

Use targeted advertising to reach the right audience. Use data to segment your audience and create personalized ads that appeal to them.

In addition, consider the time and days when there is a chance to get a maximum response while setting up your advertising campaigns. For example, if you have observed and analyzed your target audience, you must know when they tend to respond more to your ads.

The point I’m trying to make is that you should strive to put yourself in the shoes of your target consumer and learn about their lifestyle. Then, if you can accomplish this, you can limit your marketing budget to the days and times that produce the best results.

6) Retargeting Ads

Leverage social media retargeting ads, which are shown to people who have already interacted with your brand, increasing the likelihood of converting them into customers. Use retargeting to reach people who have shown an interest in your products or services. This can be done through cookies or pixel tracking. Also, keep an eye on the data if there is some time of month or day when your target audience is spending more bucks and you have more business. Such as, many people do not have the same spending capacity in the month’s second half compared to the first half. In such scenarios, investing more in your campaigns during the first half can ameliorate your marketing results, slashing CAC.

7) Utilize content marketing

Creating valuable content that appeals to your target audience can help attract potential customers to your site. Blogging, infographics, videos, and social media can all be effective content marketing strategies. In addition, indulging in appropriate email marketing by shooting customized emails to the clients looking at the pages they visited or inquiries they have sent also proves to be powerful when it comes to lessening the CAC.

B2B vs B2C: Different approaches of CAC (Customer Acquisition Cost)

1. Sales Cycle: B2B sales cycles are typically longer than B2C sales cycles, which means that B2B businesses may need to invest more time and resources into lead nurturing and relationship building. This can increase CAC, but it can also lead to higher lifetime customer value.
2. Customer Acquisition Channel: B2B businesses often rely on trade shows, webinars, and other events to acquire customers, whereas B2C businesses may use more mass-market channels such as television and social media. This can impact CAC, as B2B channels can be more expensive than B2C channels.
3. Customer Lifetime Value: B2B customers tend to have a higher lifetime value than B2C customers, which means that B2B businesses can afford to invest more in customer acquisition. However, this also means that B2B businesses may have a higher CAC, as they need to invest more in lead nurturing and relationship building.

Reducing customer acquisition costs is crucial for both B2B and B2C businesses, but the approach may differ based on the target audience, sales cycle, and customer lifetime value. By understanding these differences and using a combination of digital marketing tactics, businesses can effectively reach their target audience, improve conversions, and reduce CAC.

To encapsulate,

Let’s remember that traditional marketing is more expensive than digital marketing. However, the ROI on your digital marketing expenditure can be enormous if done right. One explanation for this is because concentrating your efforts in areas where consumers already spend time, online marketing generates higher-quality leads. Moreover, by investing in influencer marketing and partnering with influencers to promote your products or services, you can reach a wider audience at a lower cost than traditional advertising. Lastly, when the market is flooded with various AI-based marketing automation tools, the marketing personnel can also take the help of the right tools in the right ways.

One of the reasons digital marketing works so effectively for every size of business and in every budget is that personalization here allows you to change the user’s experience based on their preferences giving the most coveted results. According to 74% of marketers, targeted personalization boosts client engagement. Therefore, digital marketing can not only be a growth booster but also make you win customers at the most acceptable acquisition cost.

Have you nailed CAC for your client? I would love to hear your side of the story & celebrate it with the world. Feel free to share details in the comments, till then keep clicking, keep rocking.