The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Customer Acquisition Cost (CAC) is something that all companies should concentrate on because it can help you understand a few things. One, how much you’re spending on every new customer that you acquire. Two, you’ll know if you need to tweak any of your strategies to lower your CAC.
In the last six years, the cost of acquiring customers has increased by 60%. However, this is only the beginning of the CAC; you must also consider how much each client spends, determined by customer lifetime value.
Calculating your CAC involves tallying all of your company’s marketing and purchasing expenditures and dividing them by the number of new clients you get.
Here’s the breakdown:
Marketing Costs / The Number of Customer Acquired = Customer Acquisition Cost
It can seem like a lot of work to calculate your customer acquisition costs, but it’s definitely worth it. Once you’ve got that down, you can optimize your strategies to lower it! The infographic from GetVoIP below reveals five unique ways to improve your CAC today. For example, implementing a retargeting strategy can help improve customer conversion rates by generating highly targeted campaigns for prospective customers.
Likewise, you can use marketing automation such as chatbots and automated personalized emails and social media campaigns to boost efficiency. For example, Birchbox subscribers receive a welcome email followed by a string of emails on beauty tips and makeup tricks to help build trust with prospective customers.
More information and ideas can be found below. By recognizing and improving your CAC, you will thoroughly know what new customers cost your company, and you will be able to implement techniques to increase your ROI.