For any business that is looking to remain viable and profitable, there is one metric that is worth taking a closer look at: customer acquisition cost.
Total Cost of Marketing / Total Number of Customers
The formula for customer acquisition cost is rather simple, but understanding the true impact of this metric can lead your company to success.
Hoping to provide insight on how to bring down the cost of acquiring customers while still providing remarkable service, we have put together this article on customer retention strategies that are geared towards bring costs down. With these strategies in place, not only will we reduce your bottom line, but your customers will thank you for it. Let’s get started.
1. Set the right expectations
Before you begin the quest to lower your customer acquisition cost, you first need to have a firm idea in mind of what it current is for your business. However, completing the simply formula we laid out at the beginning doesn’t tell the full story. In fact, companies that take a simple approach to CAC often end up underestimating the cost, leading to poor marketing decisions.
Instead, we believe you should follow the advice of Neil Patel and set your expectations high. He believes that you should at least double or triple your customer acquisition cost. This way, you can give yourself some wiggle room as well as plan for the worst while shooting for the best. Once you have your expectations appropriately set, the work of getting that number down truly begins.
2. Boost website conversion rates
One of the simplest ways to boost customer acquisition cost is by making more out of the opportunities you already have. While your website might have a steady flow of traffic, unless you are converting a good amount of those users, your efforts will be fruitless. Thankfully, there are a few easy ways to improve this.
By monitoring and testing different marketing messaging on your site, you will be able to see areas that you need to improve. From there you can run A/B tests and find the right balance for your customer base. Run tests not just on your call-to-actions, but your page copy, layout, and email formats to find the right mix for your customers.
Once you start to get a better idea of who your customers are and what they value, you can move on to the next stage of the process: creating buyer profiles.
3. Create Buyer profiles
Gone are the days where marketers could have one message that they applied across the board for their customers. In 2017, personalization is the name of the game and customers won’t settle for less. Since you likely don’t have time to write a personalized message for every one of your customers, we recommend working with a user engagement platform to create buyer personas and make sure the right messaging gets to the right people.
By segmenting your audience into different buyer profiles, you and your marketing team won’t have to shoot in the dark when you release a new marketing campaign. An important aspect of this that should be emphasized is in order to create solid buyer profiles you will need a good amount of data on your customer base. Make sure that you have good systems in place for collecting and analyzing data to get the most out of these profiles.
4. Use retargeting
After creating buyer profiles for the different segments of customers that your company services, two scenarios can unfold. You either convert the customer or you don’t. But don’t worry, converting the customer here is not the end of the journey, it just means it’s time to do some retargeting.
Customer acquisition cost can quickly rise out of control without the proper processes in place. One way to ensure that you are getting the most out of your marketing dollar and reduce churn rate is by reaching out to customers who either never bought but showed interest or are due to buy again.
Use your buyer profiles to manage customers that are prime for retargeting and let them know that you are still interested in their business. Instead of throwing away all that hard work just to see it come to nothing, try reaching back out. You never know who might need that extra phone call or email to push them over the edge.
5. Automate everything
Another way in which you can make sure that customers don’t fall through the cracks is to automate everything that you can. For instance, your retargeting campaign can mainly be done through automated systems that follow up with your customers. Simple things like automated thank you emails or abandoned cart notifications can remind a customer of their original intent.
Additionally, there are new technologies such as SMS marketing and push notification services that can help you with automation and retargeting. By employing these new techniques and planning your use of various marketing channels effectively, you can meet your customers at many different points along the sales funnel to ensure that they are making your money back for you. Hopefully many times over.
6. Relentlessly test
Our final strategy for reducing customer acquisition cost and improving your ROI comes from an unlikely source: mobile app development. When you are working to create a mobile app, relentlessly testing your app is the surefire way to make that sure that no bugs make it through to the final product. Although this doesn’t always happen, the process of testing your project over and over has benefits beyond simple bug fixes.
We recommend taking the same approach to your marketing messaging and efforts to bring down customer acquisition cost. Like we said at the beginning, marketers can no longer create a campaign and let it run itself. It requires constant tweaking, testing, and analyzing to make sure that you can bring costs down and increase conversions wherever possible.