13 Tips for Maintaining a Healthy Customer Acquisition Cost

What is one tip to help marketers maintain a healthy customer acquisition cost?

Now, more than ever, you’re probably being asked to reduce costs in any way possible. While major and obvious cost avenues are always considered, you can get creative by improving your marketing strategies and keeping customer acquisitions costs low, ultimately driving business.

Below, marketing professionals have offered 13 tips on how to maintain a healthy customer acquisition cost (CAC).

• Double Down on Channels That Work
• Automate Marketing Wherever Possible
• Replace and Remove Underperforming Ads
• Invest in SEO
• Constantly Look to ‘Trim’ Your Targeting
• Utilize All of Your Data for Targeted Personalized Marketing
• Understand How CAC Relates to LTV
• Provide Good Customer Service
• Look at CAC by Channel, Not Just Overall
• Segment Your Market Well and Target Niches Sequentially
• Continuously Test New Channels
• Ensure Your Funnel Has Clear Paths to Conversions
• Align Content Marketing with SEO Insights

Double Down on Channels That Work

One great tip is to test different marketing channels and see which ones are most effective at driving leads and sales. Once you’ve identified your best-performing channels, you can focus your efforts there, while scaling back on channels that are less effective. This will help you to keep your customer acquisition costs low while maximizing your ROI.

Double down on the channels that offer the lowest customer acquisition costs, and again explore others only when you find that you are getting diminishing returns from the ones you are exploiting. Customer acquisition cost is the sum total of all the expenses incurred in attracting a new customer. It’s important to keep this number as low as possible, as it helps you to stay competitive in the market and ensure that you’re getting the most value for your marketing dollars.

Matthew Ramirez, CEO, Rephrasely

Automate Marketing Wherever Possible

We automate our marketing process as much as possible using Hubspot. Using a tool like this makes it easier to manage our inbound marketing strategies, social media posts, and our customer service needs.

With our social media, we create personalized content and consistently interact with our target audience. We engage with our audience online, which in turn helps with customer retention. Simplifying and offloading the brunt of this process to automation helps us maintain a healthy customer acquisition cost.

Patrick Ward, Vice President of Marketing, Rootstrap

Replace and Remove Underperforming Ads

If you want to maintain a healthy customer acquisition cost, then start by replacing and removing underperforming ads. This is easy when it comes to digital advertising if you’re already following best practices and tracking your results. You’ll quickly and easily see the click-through rate, conversion rate, the cost per acquisition, and other metrics.

Ultimately you’ll look for the highest return on ad spend (ROAS), and make adjustments to increase your sales volume while keeping within an acceptable range. This is harder to track when you use other forms of advertising, but you can still compare the performance of different ad campaigns relative to each other. For example, you can track ads with custom coupon codes. Or, you can run different ads in different geographies or for different timeframes and compare results.

Dennis Consorte, Digital Marketing & Leadership Consultant for Startups, Snackable Solutions

Invest in SEO

SEO is probably the cheapest marketing channel once it’s properly implemented, so investing in it is an effective way to have a low CAC. Unlike SEA, the results of SEO strategies aren’t immediate. SEO is a great long-term investment, as it’s a significantly cheaper marketing channel and tends to bring in better quality leads. SEO is also a useful option for small businesses, which can always use local SEO to promote themselves on Google Maps.

Marco Genaro Palma, SEO Consultant, Genaro Palma

Constantly Look to ‘Trim’ Your Targeting

By ‘trim your targeting’ I mean that you need to focus on reducing any members of your target pool who are unlikely to engage any time soon.

Whether that’s adding to a negative keyword list during a PPC campaign, or creating content strategically tailored to a very specific persona (and not just with the goal of obtaining generic traffic), you need to constantly be ‘trimming’ to ensure that you’re not wasting time and money in the wrong places, and instead only focusing on acquiring customers that can be 100% justifiable in relation to their costs.

James Taylor, Founder, Digital Tool Report

Utilize All of Your Data for Targeted Personalized Marketing

Customers expect a personalized experience and reward companies that provide them with loyalty. To get it right, marketers need to make sure they’re combining all of their customer data from every channel and every department into one unified customer profile. This comprehensive picture of each customer can help you drive more personalized interactions.

But it can also drive significant marketing efficiency and savings by helping you use predictive modeling to understand which customers are most likely to buy as well as driving next best action (NBA) or next best offer (NBO) profiling. Additionally, understanding customer data and activity across all channels can ensure you’re removing purchasers from campaigns, and even improve lookalike audience profiling so you get better ROAS.

Kellie de Leon, Senior Director of Content Marketing, Treasure Data

Understand How CAC Relates to LTV

Given the importance of customer acquisition costs (CAC) in a marketing budgeting, it’s critical that marketers keep a close eye on this metric. There are a number of ways to do this, but one key tip is to track CAC over time and compare it to other marketing metrics, such as customer lifetime value (LTV). By understanding how CAC relates to LTV, marketers can make more informed decisions about where to allocate their resources. 

Additionally, monitoring CAC on a regular basis can help marketers identify trends and take action to improve their customer acquisition efforts. By taking these steps, marketers can ensure that they are making the most efficient use of their resources and maintaining a healthy CAC.

Jim Campbell, Founder, Wizve Digital Marketing

Provide Good Customer Service

A high customer retention rate is a good way to maintain a healthy customer acquisition cost. This translates to efficient and consistent customer service. Consumers will always come back when they are happy and satisfied with your company. They can also promote your brand through word of mouth to friends and family. This is one of the most effective and cost-efficient marketing strategies there is.

Michelle Siy, Content Writer, Oliver Wicks

Look at CAC by Channel, Not Just Overall

When marketers are trying to maintain a healthy customer acquisition cost, they need to look at CAC by an individual marketing channel, not just an overall blended number across all channels.

To accomplish this in my businesses—I keep a Google Sheet that tracks our main metrics by channel: traffic, spend, and leads. We also track, on a weekly basis, the number of new customers we’ve signed. The data on new customers by channel is not perfect because of Analytics privacy measures, but we then take the leads to customers conversion and apply it across channels to understand CAC at a channel level.

John Doherty, CEO & Founder, Credo

Segment Your Market Well and Target Niches Sequentially

Acquisition costs grow exponentially as your target market grows in size. To achieve a profitable share of voice in a large market requires much greater investment compared to a smaller alternative. So segment your market well and be specific with your campaign targeting. By building an excess share of voice in niche segments, you’ll achieve comparably high market penetration—and in turn be able to exert much greater control over your new customer acquisition costs.

Chris Martin, Chief Marketing Officer, FlexMR

Continuously Test New Channels

Once you have your baseline CAC, always try to beat it. And not just with new creative executions within your top performing channels, but by testing new channels. Are IG influencers your top performing channel? Great! Keep that running and try TikTok influencers. Next, aim for YouTube influencers.

Channels evolve rapidly—new ones emerge, provide great value, quickly mature, and open the way for the next new one. Stay open-minded, keep testing, and you’ll keep that CAC from creeping up on you!

Mike White, Co-founder, Universe

Ensure Your Funnel Has Clear Paths to Conversions

To lower your customer acquisition cost, be sure that your sales funnel offers clear paths to conversions, which may typically be more in-depth information or a checkout page. If you’re even remotely confused by your own funnel, then it’s highly likely that consumers may also find it difficult to follow. Always have a checkout or add-to-cart button for those ready to purchase right away, as well as avenues leading to more content for those who require more details.

Victor Mathieux, Co-Founder & CEO, Miracle Brand

Align Content Marketing with SEO Insights

A great way is to implement a carefully planned, keyword-optimized content marketing strategy to promote organic growth and lower the long-term cost of client acquisition. Great content nurtures prospects along the customer acquisition funnel, whether it’s a blog post, infographic, video, or podcast. It promotes your brand as a reliable and authoritative player in your sector, giving consumers something of value and persuading them that you can meet their needs exactly.

Your content needs to be in line with the customer journey. People at the top of the funnel will probably need a lot of details on how you can help them, which you may give them through enlightening blog articles, ebooks, and knowledgeable material. Include a strong call to action that compels people to take action.

Leonardo Suárez Suárez, SEO, hispanolinks