11 Tips to Lower Your Customer Acquisition Cost (CAC)

It is quite clear, regardless of network, that the digital space has become a competitive one for businesses. Every company on the internet is vying for the attention of the same customers( in one way or another ), inducing effective marketing to your target customer harder and harder. On top of that, average costs of pay per click ads are increasing.

digital ad spend by year

It’s important to make sure your systems and processes for acquiring new patrons via these spaces are cost-effective. Aside from operating or maintaining perfectly crafted paid information campaign, there are a variety of techniques you can use to lower your customer acquisition expenses, or least stir that figure maintainable and scalable over time.

So in this post, I’m going to cover

Define customer acquisition and patron acquisition cost( CAC) Explain the difference between CAC and CPA Provide 11 tips and tactics you can implement to lower your client acquisition rate.

What is patron acquisition?

Just as it clangs, it entails the acquisition of paying customers to your business. However, it does not refer merely to that one action of clicking “purchase” or signing a contract. It encompasses the full direction from prospect to paying customer.

For some enterprises( ecommerce in particular ), that direction may be short in duration with few stops along the way. For others with a longer marketings round, it could be weeks, months, or even years.

Regardless, a client acquisition strategy aims to ensure that every step in the passage to becoming a customer is as seamless as it can be, allowing you the largest possible changeover rates.

Building out and understanding your business’s funnel is one of the most difficult things for any marketer to undertake, particularly when you don’t have the data to support your decisions. We’ll get into that later, but I’d like to also examined the difference between CAC and CPA.

Client acquisition cost vs expense per acquisition

One thing we need to make clear is that customer acquisition cost( CAC) is not the same thing as expense per acquisition( CPA ).

What is client acquisition expenditure( CAC )?

You calculate your customer acquisition rateby dividing your overall publicize invest by the number of brand-new customers you received as a result. CAC is the most important metric when operating direct-response advertising campaigns, but in many cases, it is used for measuring the success of your marketing at a business level, as opposed to a campaign level.

how to lower your customer acquisition cost—CAC formula

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What is expensed per acquisition( CPA )?

Cost per acquisition, on the other hand, is more of a campaign-level metric. CPA is simply the cost to acquire a cause( so, anyone but a paying customer ), whether through a content download, free test, demo asking, or any other submission of contact information with intent.

In the grand strategy of things, CPA is important but the conversion rate throughout the funnel is more so. Let’s say for example, you are driving results for a sales demo or consultation. Although this lead type may be considered very low-funnel, there may be a large discrepancy between how many leads-in convert on these recommendations and how many of them become paying customers.

Depending on the nature of your business and sales procedures, you may be able to sacrifice a higher CPA if the conversion to customer and return on ad spend is high. This becomes a crucial factor when vying with other jobs for valuable ad real estate.

customer acquisition cost vs cost per acquisition formulas

As stated previously, if you are running ads for ecommerce then the difference between CAC and CPA may be minimal as you can instantaneously see whether your ads are establishing you fund.

The first action a consumer takes could very well be to go to your online store and make a purchase.

How to lower your customer acquisition expenses

In this section, I will run through 11 tips and tactics to help you lower your patron acquisition costs, or at the least, begin to think about how to improve the overall efficiency of your marketing funnel.

1. Have tracking in place

I cannot be stressed how absolutely critical it is to have accurate tracking in place. From ad click to website visit, to lead, to patron, you need to know which traffic is coming from which channel and ideally, which campaign.

Don’t just send users aimlessly to a landing page without setting up conversion tracking within each platform firstly. That’s where you will be able 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 use individual landing pages or sorts specific to the channel you are advertising on, or develop UTM parameters, it is essential to be able to tie performance to specific campaigns. And be sure to set up conversion appreciates so you can connect paid advertise expend directly to contributes within your pipeline.

2. Set a baseline

Given the immense differences between businesses and sales cycles/seconds, it may take some time to arrive at your CAC. If leadings come into your pipe but take months to convert to customers, there is an opportunity look like you are in the red for some time.

This is why determining the baseline transition rates for your advertisements, canals, and platforms is crucial. Once you understand the average conversion ratesthroughout your funnel you can begin to accurately predict the CAC.

3. Align your ads accordingly

Yes, leadings acquired through a demo asking are much more likely to convert into a paying customers than those acquired through a content download. But an ad promoting a free experiment for a project management platform is not going to perform well for users simply looking for project management tips or templates. In this instance, it would attain more sense to promote a free guidebook or template. You can then develop retargeting ads for incrementally lower-funnel gives based on who’s engaging with each predating ad.

The point is, some businesses think they can target prospects with bottom-funnel promotions exclusively and drive scalable profitable returns. Although this can work for some, most will find their conversion rates plummet and customer acquisition cost( CAC) skyrocket. Keep your patron acquisition rate low by spending on offers most likely to convert at each stage of the funnel.

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

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For tips-off on doing this through Facebook ads, check out these 5 Steps to a Conversion-Driven Facebook Ads Sales Funnel.

4. Have a clear path to conversion

I could have named this section “optimize your funnel” but doing so would oversimplify the point I to attempt to induce. The greater framework of the marketing funnel comprises the minor components of publicities or presents.

In addition to cause sure your offers align with your consumers’ stage in the funnel, you should also make sure your subsequent offers align with the direction they’re most likely to take. For example, the priorities in your funnel may contain content downloads, nonetheless, you may have several different pieces of the information contained. It’s important to strategize that content and align it with the target audience, the needs and requirements, and ensure there is a direct path to marketings from that conversion.

And then, be sure to strategize your subsequent presents. Causes that download guide A might be interested in a different retargeted ad offer than leadings that downloaded steer B, or who use your free tool.

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

Create somewhat gradual, but clear, routes to conversion based on your marketings cycle and the offering that acquired the result. This behavior you can scaped drop offs in changeover rate from have contributed to marketings. For example, a content download loosely associated with your product or service will need several more mini changeovers before they transformed into a client. You just wanted to strategize every layer of your marketing funnel to align perfectly with sending the future prospects towards sales, at the right pace.

5. Use landing pages

Now, there are ways to increase conversion rates without touching a single landing page, but this is not supposed to be your entire strategy.

I still ensure many tribes not using them. In other terms, they create ad campaigns that send individuals directly to their website in the expectation that prospects will convert there. Even if you have a conversion-optimized website, I advise against this because there are too many options on your website that they are able( and will) confuse the user from converting on the action you are targeting with your ad.

Create landing pages specific to the gives in your ads so that the only CTA on that landing page is the action you want them to take. And here you can include important details in your landing page copy to address any hesitations, give your importance proposition, and get more conversions.

6. Optimize your website and property page suffer

One of the most common discussions for decades at this point is the website experience. Books, articles, videos, and webinars have all discussed the important roles your website plays in the grand strategy of converting expectations into customers.

First, there needs to be complete continuity between your ad and landing page( learn more in our landing page tips-off ). The print and imagery should look and feel the same and communicate the exact same message.

example of continuity between ad and landing page

There should be no dissonance between these two components. The ad should align perfectly with the page that users are being wish to refer to. This is one of the easiest ways to increase conversion ratesand lower your client acquisition cost.

As far as web acceleration goes, you should ensure your website does not take too long to load and is easily navigable. Regardless of whether you are using a landing page that is hosted on something like HubSpot or Unbounce, many someones will want to browsing your primary site before making any purchasing decision. You can learn how to optimize your page speed here.

7. Get into the weeds of conversion data

Whether it’s through looking at Google Analytics data or the transition information provided within the advertising platforms( YouTube Studio may surprised to see me ), it is important to understand as much as you can about the conversions taking place, such as 😛 TAGEND

What time of day Which days of the week Which devices

If you find that most of your leads convert through the time window of 9AM to 5PM Monday through Friday, schedule your ads to only run at those days to get the most out of your ad invest and lower your CAC.

how to lower customer acquisition cost—conversion action data view

If you see that desktop users are costlier to acquire but are much higher in quality, then you should allow yourself to spend more to acquire these customers and eliminate or separate mobile users entirely.

Get into the weeds on your transition data in order to be allowed to invest more only where and when you need to instead of increasing costs overall and squandering spend.

You can also check to see if you’re wasting spend with our free Google Ads Performance Grader.

8. Check your placement specifies

There are multiple strata to an effective paid ad strategy that could be used to warrant several blog posts, but a lot can be achieved simply by paying attention to the details of how your campaigns are set up. The first detaili to check is, on the Facebook or YouTube side of things, the placements you are targeting. For example, many businesses will pass direct response campaigns while having the define for “automatic placements” enabled at the ad determined tier 😛 TAGEND

how to lower customer acquisition cost—check placement settings

This will automatically include the “Audience Network” which will serve your Facebook ads across various app properties.

In my experience, the Audience Network has historically push very low-quality clicks and few, if not any, changeovers. Although Facebook’s algorithm is engineered to deliver the most answers for a choice purpose as possible, oftentimes there will be a good amount of wasted spend on the Audience Network placement.

You can check to see if you’re waste spend with our free Facebook Ads Performance Grader.

9. Check your locating situates

Another good example of campaign gives that can influence CAC is the location targeting in Google Ads. When going through your search campaign’s setting you will notice a section for sites 😛 TAGEND

how to lower CAC—location targeting view in Google Ads

If your business needs to serve ads to someones within a specific location, expand the locations tab and select “people in or regularly in” your target area, and make exclusions as needed.

how to lower CAC—geotargeting settings in google ads

Many times, some of the smaller details within the setup of a paid advertising campaign can have the biggest impact on the quality of makes that you drive through it–and ultimately, your CAC.

10. Use bidding strategies

The last-place constituent of paid publicize that can impact your patron acquisition rate is your bid strategy. Leveraging bid strategies( within Google and Bing at least) can greatly improve your base CPA and subsequently your CAC. With campaigns that have had enough conversion data, I have found Target CPA bidding as an effective strategy for maintaining average costs for paid search campaigns.

how to lower CAC—bid settings in google ads

Of course, there are a lot parts and layers to the funnel deeper than the costs at the top but you should take advantage of any behavior you can improve these metrics. Take into consideration the audience( or keyword) and funnel/ advertisement when making decisions on how competitive you should be.

11. Create great content

You can’t escape it. Marketing success ever comes down to content. The guides and collateral you render, their arrival page copy, the ad copythat promotes them( and other non-content offers ). If you want to lower your patron acquisition expenses, you’ve got to write copy that sells.

How to lower your customer acquisition expenditure[ summary]

As you can see, for businesses with a longer marketings round, lowering client acquisition rate( CAC) expects increasing transitions and lowering the cost of those conversions( CPA) throughout your entire funnel. In this post, we’ve provided 11 ways to do that 😛 TAGEND

Have tracking in place Set a baseline Align your ads accordingly Have a clear path to changeover Use landing pages Optimize your website and property page suffer Get into the weeds of transition data Check your placement establishes Check your geotargeting puts Use bidding strategies Write great content

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