In this blog, we'll cover everything you need to know about acquisition marketing. We’ll answer questions like what is customer acquisition cost (CAC) and how to calculate CAC. Plus, we’ll offer tips and strategies for keeping your CAC low.

You've spent valuable time perfecting your product or service, but your company’s continued growth boils down to one thing⎯customer acquisition. 

For any business to survive in today’s saturated marketplace, it must have loyal, repeat customers, and it’s not easy.  Finding potential customers is one thing. Once you’ve finished the lead generation part then you also have to make sure they make it through your customer acquisition funnel! 

The whole process can be incredibly challenging for any small business that has a limited marketing budget. The good news is there are acquisition marketing strategies you can implement that won't break your bottom line. Here’s what you need to learn:

What is customer acquisition cost?

Customer acquisition cost (CAC) is the approximate total cost needed to gain a new customer. It includes things such as: 

• Total spend on ad campaigns
• Tools and software 
• Salaries and wages for your marketing team and sales teams
• Other overhead associated with acquiring new customers within the evaluation time period 

CAC is a metric of utmost importance because it tells if you’re spending too much to acquire new customers. The lower your CAC is, the more effective your acquisition marketing strategies.  

How to calculate customer acquisition cost 

To calculate CAC, divide the total cost of your marketing and sales efforts by the number of customers acquired. You can calculate this number for your whole organization, but we recommend a more tailored approach. 

You should calculate CAC separately for each of your marketing channels, including email marketing, paid ads, and content marketing. Then you can compare the profitability of each campaign and channel to see which ones resulted in the most acquired customers at the lowest cost. 

Tips to reduce customer acquisition cost

Here are some strategies you can implement to bring in new customers at a lower cost.

1. Target the right audiences 

First and foremost, ensure you are putting your resources towards reaching the right audiences. You can do this by creating a customer persona for each target audience. 

Buyer personas represent someone who would use your product or service. Develop each buyer persona using data and research on the demographics of your existing customers. 

The following factors are often included in customer personas:
• Age
• Gender
• Income
• Buyer motivations

When you are clear on your target audience, then everything is easy. You can engage specific audiences more meaningfully by reaching them in the right places with the right messaging. 

It’s also important to segment your audience and content. For instance, a user who has already signed up as a subscriber may not benefit from the same content as new visitors. Create unique blog posts with calls to action for each unique audience, and watch your conversion rate skyrocket. 

2. Retarget potential customers  

Retargeting is a sound strategy for staying in front of prospective customers and helping to move them through the sales funnel. Abandoned shopping carts, incomplete forms, and other ways customers bounce during the buying process are, unfortunately, too common. Sometimes, a little nudge is all that's needed for them to come back and complete their transaction.

Retargeting works because it helps businesses generate highly targeted campaigns for convincing a potential customer to buy. For example, if someone wasn’t 100% sure your product or service could help, retargeting them with testimonials can ease their fears. 

Typically, the first time visits your site they don’t develop trust with your brand. Seeing your company pop up in several places can help build brand awareness and credibility. 

3. Boost customer retention 

Always remember these stats: Acquiring new customers costs 5 to 10 times more than selling to a current customer. Additionally, current customers spend 67% more on average than those who are new to your business. 

It’s always easier and cheaper to convince existing customers of your company’s value than to convince new customers who have not yet interacted with your brand.

Customer retention is the name of the game. Lower customer acquisition costs by improving your repeat customer rate, purchase frequencies, and average order values. Consider retention strategies like customer feedback loops, loyalty programs, and educational marketing.

Use these effective ways to keep current customers happy and returning for the long term.

4. Try affiliate marketing

Affiliate marketing has become an increasingly popular customer acquisition method. Basically, affiliate partners promote your business or brand in exchange for a commission on every sale they generate. As this strategy is performance-based, you only pay when affiliate partners deliver results, effectively reducing CAC. 

Similar to affiliate marketing, influencer programs are also favored for customer acquisition. Social media influencers already have a good reputation in a specific area. Leverage their expertise and ask them to create posts that promote your products. Influencers typically get paid per post and, like an affiliate, may also get a fee for each sale.

5. Automate your marketing

You can lower customer acquisition costs by using marketing automation in conjunction with customer relationship management (CRM) tools. With marketing automation, you target customers with automated messages across email, web, social, and text. Messages are sent automatically, according to sets of instructions called workflows, which are based on schedules and customer actions. 

Marketing automation reduces CAC by eliminating repetitive tasks. Automation tools also provide templates for creating the right content to be sent out during each stage of the customer acquisition funnel. With marketing automation, you can "set it and forget it" while you focus on other tasks. Then when results come in, analyze and tweak as needed. 

TL;DR: Customer Acquisition Marketing

All businesses should keep a close eye on their customer acquisition cost to see where they can reduce spending and improve results. When you can lower your company's CAC, you'll save time and money, which go towards scaling your business.