Do you know it costs over 6 times more to get the new customer than to retain the current one? Suppose you never got new customers, but, you cannot grow your business. It is true in this e-Commerce world. Since many consumers now switch to internet shopping, the business competition is quite fierce. So, one thing you may do is to reduce the customer acquisition cost. But, the thing is how to do that? Let us check out some top tips that will help you understand it better.
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What should I do to lower CAC?
Suppose you find your customer acquisition cost is very high, don’t worry. There’s so much you may do to reduce it. However, first, you need to know the real cause of the elevated CAC. You can do it by going to its CAC formula & breaking this down. To reduce CAC, you may reduce the total cost of the sales & marketing and increase the new customers count.
It’s often simple to control the costs than to find new clients magically. And the secret will be to segment if possible as well as isolate the fastest way of reducing the CAC with the least impact for the business. There are a few potential ideas:
Calculate CAC rightly
The CAC is the total sales & marketing cost that will be divided by the total number of customers. To earn a positive ROI, you must start with the target CAC. It can serve as the benchmark for sales as well as marketing efforts. Suppose you are a new business, you must look in average CACs for the industry & spend a little time in calculating the reasonable CAC, which will allow your business to get profitable.
Test the ad copy
Another version of the ad copy can give you very good results, however, you can make those results much better just by optimizing the copy. You can look at click-through rates that will identify the best-performing ads & see how it differs from the ads that do not perform. Pause the low-performing ads & write variations, which are quite similar in style & language to stronger ads.
Increase the conversion rate
It is time to put a little effort into turning the leads into sales. You might think you have already discovered what leads can turn in loyal customers, however, there is so much you can do. You have to prime the site for conversion. There’re a lot of ways you can increase conversion rates. Rather than focusing completely on driving more traffic, think of incentivizing the conversions. Suppose somebody signs up for the mailing list, you can offer them 10% off the first purchase.
Get optimized landing web pages
Improving & optimizing various aspects of the paid media strategy constantly is very important to reduce CAC in a long term.
To improve the number of customers, will you identify the patterns in the customer groups, for instance, by location, age, devices they use, and when they buy? For every factor within a CAC formula, slice & dice every factor to know which are the biggest contributors to the CAC & reduce it or increase it accordingly.