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In the business world there is a clear struggle to become increasingly competitive with a view to sustaining or expanding market share. For this reason, it is necessary to evaluate with certain frequency how much it costs the company to incorporate new clients to meet its financial and strategic objectives.

High costs prevent the company from reinvesting in an optimized way and, therefore, affects the capacity for growth. Here's what customer acquisition cost actually is and some guidelines to keep the cost down as much as possible.

What is the Customer Acquisition Cost?

This is the total amount that a company needs to invest to acquire new customers. This cost implies each of the activities that are necessary to carry out to attract and convert prospects within our sales funnel.

Therefore, everything you need to do from traditional or digital advertising, organic positioning, work team involved, website, your own digital products in the form of Lead Magnet, email marketing platforms, everything is part of this cost.

Ideally, you should have the greatest precision about each aspect that makes up the funnel, because the objective is to evaluate which of these it is possible to make more efficient, reduce or decrease without affecting the conversion percentage but improving profitability.

How is the Customer Acquisition Cost Calculated?

Suppose you have created a campaign for the launch of a new product. Its duration is estimated for three months, so the first thing is to add the aspects in which it had to be invested and in which they were already counted, but which were part of it.

Once you have this total amount, you only need to divide the amount by the effective number of new clients that were attracted through it.

Customer Acquisition Cost = Total Investment in Marketing / Number of New Customers

Also, it is important that you take into consideration that if any unplanned event within the campaign affects the number of customers acquired by the company, they should not be part of the cost because it is not part of the effort of their effort.

Imagine that they sell delicious desserts in a small restaurant and an influencer attends without this having been planned. The character picks up his mobile, creates a video and recommends your desserts because he has loved your product.

Of course, it can be very difficult to decipher who is coming and who is not based on the influencer's reference, therefore, a small survey after consumption will help you to know why the client found out about your company to decide and thus determine these costs in a way fair.

On the other hand, even if the campaign lasts three months, the recommendation is that you do not wait until this period is over to evaluate this cost. Every fortnight or monthly you should do an evaluation to identify what aspects have affected the campaign and determine what works and what does not.

If you do not want to carry it by campaign, but prefer to do a periodic evaluation, then once a month is enough for you to have a good overview of how your business is working on conversion.

You must also bear in mind that at the beginning of the business, the investment will be very high and the number of clients will be low. It is normal for the metric to show a substantial value in these periods.

However, the job is to achieve that month by month is reduced and also work on satisfaction, to achieve customer loyalty which will allow to achieve high rates but this time of repurchase.

Remember that it is always cheaper to make a satisfied customer buy again, than to buy new ones. For all this it is necessary that you know your buyer persona and that you constantly evaluate each point at which the client relates to the company.

So you come to the end of the month and you have a sales volume on the product or service that was on sale and that was part of the campaign. The customer's acquisition cost must be part of the total cost of the product.

Identify the percentage that this indicator represented with respect to the rest of the elements that are part of the global cost and evaluate that each month it is smaller. However, below you will find guidelines you can follow to minimize the cost.

How to Reduce Customer Acquisition Cost?

To reduce this cost you must take into consideration the following aspects:

1.- Automate marketing management to the maximum

Automation is one of the factors that helps companies the most to lower operating costs. Above all, if yours is a small business, this is when you should place more emphasis on automation.

Look for free options that may be feasible for your project or some paid options that may provide you with a greater benefit. And it is that not always opting for free will be the best for the company, hence you must evaluate the cost-benefit of each tool.

If you must include people for your marketing projects, think about how you can reduce these costs and not affect the performance of your projects or campaigns. Outsource everything you can.

2.- Focus on your ideal client

If you know your ideal client well, you can direct marketing management towards a precise point in the market and not cover a world that you do not know if it will respond. That is, segment each of your campaigns and content as much as you can.

When we segment, all efforts are focused on the group of people that you know have that particular need that you are capable of solving. Find a space in those media in which you know that customer profile you want to reach has a greater participation.

3.- Create a referral system

A satisfied customer will speak highly of your company or product. But, if you also offer some kind of incentive to that client to promote your products or services, then the investment in advertising will be reduced and the acquisition cost will be lower.

Determine how you can compensate that customer who brings you a new prospect to your business. This will also collaborate to increase the level of connection of the client with the products and services of your company.

4.- Create your database of prospects and clients

You must create a lead magnet attractive enough that people want to leave their emails. Email marketing campaigns have a much lower cost than advertising payment and this encourages sales.

Evaluate every aspect of the funnel that will help you get those conversions and make sure it has enough persuasive power.

Above all, if your company or brand is not so recognized, this should be a priority. Otherwise, you should invest more in advertising to make yourself known and create the necessary trust that allows the customer to see in your products and services the solution to their problem.

You should also focus your focus on past clients, as this can minimize the need to invest more frequently in advertising patterns.

5.- Don't stop focusing on Content Marketing

Create interesting content that responds to daily problems of users, you will be welcome. This opens the space to show how it is possible to obtain practical solutions, at a good price or that provide the level of satisfaction that you expect through your business.

Conclusions

The cost of customer acquisition is what determines how much it was necessary to invest for a prospect to make the decision to buy that product or service that you promote through your business.

To do this, you must know the total amount invested in marketing items to attract attention and attract that customer until their conversion. You can then determine how much the CAC was by dividing this amount by the number of customers acquired during a specific period.

If you want to lower this cost, you should focus on:

• Automate your marketing as much as you can.
• Know your ideal client very well and focus on him.
• Generate referral systems.
• Create your own databases of clients and prospects.
• Generate good content marketing.

Thanks for your time 😀