The cost to acquire a new customer according to Harvard Business Review, is anywhere from five to 25 times more expensive than retaining an existing one. So how do you reduce this cost in order to maintain a profitable return on investment?
1. Use marketing automation
“For any average business, salaries can roughly account to about 75-80% of overall expenses. Now let’s say if converting a single customer requires, say, five minutes of human input, the cost that goes into those five minutes (the employee’s salary) may buy you up to three days of marketing efforts done through an automated marketing software. This way, you will reduce the CAC since you’re spending less.” Forbes
It starts making sense then to invest in marketing automation tools that well help you streamline (and make more cost effective) the process of reaching out to target audiences. For example, if you operate in the real estate sector, a smart real estate CRM solution like Qobrix can help you in the execution of sales and marketing campaigns categorised into leads, opportunities and customers; it can provide you with the tools required to monitor which campaigns generate the most enquiries and which don’t so that you can modify accordingly; it can generate multiple reports providing you with critical campaign insights like where leads are coming from and how many of those are converting into customers, and much more.
2. Deliver consistently good customer service
“Increasing customer retention rates by 5% increases profits by 25% to 95%.” Harvard Business Review
It is critical to focus some of your efforts on delivering high-quality customer service, both prior to a sale being concluded and post-sale. This will help you reduce customer churn rates (the percentage of customers that opt out of a relationship with your business over a particular period), and boost customer retention. Churn is often attributed to a negative user experience (UX) on your website, poor user interface (UI), cost, competitor-driven churn, poor customer service, and more. By identifying and resolving these issues, you decrease the likelihood of poor customer reviews which often become viral hits online. Remember – if your business becomes known for delivering a subpar customer experience, trying to acquire new customers becomes incredibly difficult, no matter how heavily you invest in the exercise.
Happy customers and positive testimonials = lower CAC.
3. Monitor and improve your website continuously
“Failure to realize what works for you would result in a wastage of time and money, causing high customer acquisition cost. In order to reduce it, use your energies where the result is good.” Forbes
Work towards a faster load time, lower bounce rates, mobile and tablet responsiveness, optimised landing pages, effective call to action buttons, bold aesthetics and good copy. Perform comparative and exploratory usability testing and use A/B testing. Based on the results, you can modify your customer acquisition strategy appropriately as you will know where to concentrate your energies. You’ll figure out what’s bringing you the most leads, retaining customers and improving conversions, all of which lead to a lower CAC (Inc.).
