If you lower customer acquisition costs, you can optimize your net revenue.
And flourish your business.
You’re on the right page to start because you’ll find out:
- 21 strategies to lower your CAC with actionable steps and advice
- Genuine insider stories that worked
- Insider tips from the real world to tweak expenses and skyrocket performance
Let’s dive in.
1. Use Data-Driven Strategies
The best way to lower customer acquisition costs is to rely on data.
Accurate data reveals the best opportunities to reduce costs because you can:
- Analyze what works and what doesn’t for your company and your competitors
- Understand what channels bring you the most qualified traffic
- Realize the type of content that leads to more customer conversions
Insider tip: At inBeat, we never start writing a creative brief before understanding the root of our customer’s problems.
Insider Story: Travel App Hopper
Here’s a quick story so you can understand better.
- Situation: One of our clients, the traveling app Hopper, already had a TikTok campaign.
- Problem: They were dealing with increased ad fatigue. And since fewer people were watching their ads, they got fewer conversions.
- Process: We analyzed their strategies, audience, competitors, and the specifics of TiKTok.
- The insight: We realized their potential customers are young travelers who wanted “travel hacks” from relatable peers.
- The solution: We created a myriad of UGC ads with travel hacks. And we also tested them extensively to find the best-performing ones.
2. Test and Optimize EVERYTHING
Research isn’t the first step in your strategy. It’s a continuous process that builds the entire fabric of your strategy.
So, leverage creative testing techniques.
Find out what’s working and double down on those elements.
Pro tip: Sometimes, something as small as the colors of your ads or the CTA on your landing page can make a massive difference.
Insider Story: Focus on Your Hooks
Hooks are one of the biggest but often most neglected issues if your social media advertising has high customer acquisition costs.
Remember: People scroll down fast on social media.
They won’t watch your ads unless you hook them.
For the dating app Bumble, which we’ll talk more about below, we use three hooks per ad. And we extensively tested all of them to keep people watching.
Insider tip: We noticed that the first hook outperforms the other two by 30%. That means you need a catchy start to keep more people watching.
3. Power Your Ads with Influencer-Generated Content
Influencers, specifically nano and micro-influencers, are relatable.
And they know your audience (sometimes) better than you do. That means influencers can:
- Persuade your potential customers by leveraging specific pain points, values, and a shared language
- Help your strategy by pointing to specific insights
Plus, influencer-generated content can be more affordable than paid ads.
Insider Story: Influencers Maximize Your Budget
- Situation: One of our clients, the beauty brand Native, wanted to address a large pool of different customers.
- Problem: Their target audience has audience segments with diverse interests, lifestyles, and passions.
- Solution: Our professional micro-influencers produced the polished content Native was looking for. Therefore, the beauty brand skyrocketed its visibility across a wide market, with smaller marketing costs than paid ads.
Here are just two examples to understand the diversity we’re talking about.
This is Leticia Esparza, sparring Taekwondo World Champion, promoting Native to her audience:
Conversely, Prashant Yay is a personal stylist whose distinctive feature is his love for sustainability.
4. Create a Content System
Creating a content system goes hand in hand with the other steps above.
Basically, you want to have a broader strategy template with reusable components.
Using that template entails recombining your content assets to create ads. That means you can:
- Create paid ads faster
- Test more to double down on high-performing ads
- Optimize your paid ads for different advertising channels, from social media platforms to YouTube
All this leads to lower customer acquisition costs.
5. Use UGC
User-generated content is an amazing tool in your arsenal of marketing strategies because:
- You eliminate the costs of creating content
- You can optimize a self-powering UGC machine if you use the right strategy
- You can communicate more persuasively, thus increasing your conversion rate
Basically, UGC helps you get more with less, whether you’re using it in ads, social media, referral programs, or your landing page.
Insider Story: An UGC-Powered Social Media Calendar
One of our best success stories is organic salmon vendor Bluehouse Salmon.
- The problem: As you can imagine, salmon is not a sexy product. And there are limited ways to advertise salmon.
- The insight: There’s a niche of social media users passionate about cooking and trying diverse recipes.
- The solution: We incentivized the right people to post their recipes using organic salmon from Bluehouse Salmon. This strategy worked so well that the brand powered its entire content calendar only with social media UGC.
6. Leverage SEO
Optimizing your website for search engines can decrease marketing expenses significantly.
And that translates into lower customer acquisition costs because:
- Once you optimize your website correctly, you will rank well in search engines for your target keywords.
- More target customers will find your product organically.
- You increase high-quality traffic, meaning qualified leads who are ready to convert.
So, instead of spending that money on paid advertising, you can use it to grow your business.
Even better, good SEO is sustainable, meaning it can help you get more qualified leads passively after a point.
Companies that specialize in local New York or Perth SEO can help businesses redirect ad spending for sustainable, passive lead generation.
Insider tip: An SEO company may help you with link-building, web speed, and keyword research. But a customer acquisition agency will help you create content that sells.
At inBeat, for example, we:
- Synchronize the copy and the imagery to ensure they’re consistent.
- Extensively test different page elements to optimize customer acquisition.
- Create persuasive UGC that can be used on landing pages.
- Build specific website content and ad copy that converts.
7. Try Multilingual SEO
Multilingual SEO is a specific branch of SEO that fits international brands.
Remember to create different website versions for all audience segments in other countries if that’s your case.
This will help you:
- Reach a broader audience
- Save advertising costs
- Increase conversion rates on new markets
And all that translates into lower CAC.
8. Implement Conversion Tracking
Accurate conversion tracking entails following the metrics below for each marketing channel and campaign:
- Ad clicks
- Website visits
- Generated leads
- Converted customers
Knowing all this data helps you optimize your campaign because you can understand the top-performing tactics and double down on them.
And you can finally eliminate those that don’t work.
Potential conversion tracking solutions include:
- Individual landing pages
- UTM links
- And more, depending on your campaign
9. Understand Your Baseline Metrics
Knowing your baseline metrics is essential because it allows you to establish ground-zero parameters.
For example, if your business has a long sales cycle, calculating your CAC might give you a shock.
However, the bigger picture between different sales cycles helps you understand your baseline conversion rates.
And that means you can predict your final CAC to prevent that shock.
10. Create Relevant Content for Your Sales Funnel
Relevant content means you can attract more qualified traffic.
And qualified traffic converts.
But to create relevant content, you need a great content marketing team to:
- Understand your audience’s needs.
- Realize the type of content they’re looking for.
- Create relevant content to solve their pain points, according to the sales funnel.
- Disseminate the content on the social media platforms they’re using.
Pro tip: Don’t just create content for the bottom of the sales funnel, although your goal is to increase buying customers.
Instead, focus on solutions that convert customers from each stage of the sales funnel to the next.
Insider Story: Bumble App
Dating app Bumble wanted to increase their app downloads and get more active users at lower CAC.
- Problem: Bumble’s social media ads didn’t have high conversion rates.
- Process: We analyzed their situation, audience, and competition. That’s how we realized what they and most of their competitors were missing.
- Insight: Dating apps like Bumble target Gen Z. And Gen Z-ers crave relatable content on TikTok.
- Solution: Bumble showcased the first date experience in a paid advertisement campaign. This campaign quickly became viral and snowballed organically, so the app got more paying customers with lower costs.
11. Create Landing Pages
If your ad simply directs your potential customers to your website, they can get lost.
Solution: A specific landing page where customers convert prevents these distractions and funnels conversions.
Remember: Each offer in your ads needs a landing page with a specific CTA so your prospects can take the desired action.
Include all the essential details, such as your unique selling point.
12. Monitor Your Results
Use high-quality analytics tools, such as Google Analytics, to monitor your advertising campaign’s results.
Analyze the conversion information to understand metrics related to your conversions, such as:
- Time of day
- Day of the week when purchases skyrocket and plummet
- Platforms used to purchase
- Devices people are buying from
After reviewing this information, you can schedule your ads for specific platforms and times.
13. Set Your Campaign Correctly
An effective paid ad strategy is more than just content creation and optimization.
You need to set all its parameters correctly on the platform you’re using.
- Avoid automatic placements; instead, create your audience manually.
- Use location targeting in Google Ads, specifically if you run a local business.
These parameters will increase the quality of leads so you can obtain more conversions at a lower cost.
14. Use Bidding Strategies
A bidding strategy can make or break your paid advertising campaign in terms of customer acquisition costs.
When you’re new to a platform, start with manual bids to understand how much you’re paying for desired actions (like clicks or conversions). This will give you hands-on control and understanding.
Also, not all audiences or keywords will have the same CAC.
Break your campaigns into segments (by keyword, geography, etc.) to control and optimize bids for each audience.
You should also:
- Adjust bids by device & schedule: Some devices or times of day might convert better than others. Analyze this data and adjust bids accordingly. For example, if mobile users convert more efficiently, consider increasing bids for mobile devices.
- Monitor competitors: Use tools to monitor competitors’ bidding strategies. If they make a change, it could affect the auction and your CAC.
- Set bid caps: If using automated bidding, always set a maximum bid cap to ensure the algorithm doesn’t overspend on any given click or conversion.
- Create negative keyword lists: Always update your negative keyword lists for search campaigns. Therefore, you’re not wasting money on irrelevant clicks that inflate your CAC.
- Review your campaign regularly: Adjust your bids according to exposure and CAC. And remember, sometimes a higher customer lifetime value (CLV) in the long run can justify higher CAC now.
15. Leverage Retargeting Ads
Retargeting ads can reduce your paid ads CAC because they:
- Are cheaper than prospecting ads
- Can bring more conversions because they’re middle or bottom of the funnel
However, retargeting ads work best when you have a larger audience.
16. Start an Affiliate Program
An affiliate program lowers your CAC because your customers do the work for you.
Basically, your affiliates will sell and promote your products on their own websites to obtain a commission.
With the right incentives, these affiliates will do all the heavy lifting, creating a win-win situation.
- Set a profitable commission that’s not higher than your paid advertising costs.
- Partner with bloggers, influencers, and content creators who can bring you real purchases.
Side note: You need the right tools and expertise to implement those insider tips.
At inBeat, we use multiple software solutions to find the right creators.
That’s how we can tell, for example, that the Barbecue Lab would be a great partner for outdoor products.
The position tab shows us this website ranks high for multiple keywords with high search intent.
In layman terms, it caters to your potential audience’s needs by publishing highly searched-for content.
17. Build Your Brand Community
Building your brand community may take a longer period of time, but it’s a sustainable strategy to reduce costs.
In this community, people will engage with each other while your brand stays in the limelight.
For example, they can:
- Find better solutions to their problems using your products.
- Recommend other products from your line, thus helping you upsell or cross-sell certain solutions.
But to get there, you need to offer real value to your community instead of focusing on making a quick pitch.
Insider tip: People follow social media accounts they trust.
One of our clients, Linktree, understands that and creates relatable content on social media:
Linktree is now imbued in the influencer culture, becoming a practical solution for these creators without additional marketing effort.
But to get to that stage, you must invest in this long-term strategy of creating a brand community.
18. Leverage Email Marketing
Email newsletters are affordable, targeted, and get you qualified leads.
Plus, you can follow their parameters closely, which helps you reduce your marketing budget in the long run.
Of course, you need:
- The right content for each stage of the marketing funnel, according to the customer journey
- Personalized messages
- Valuable insights
Insider tip: Focus more on problem-solving for your customers than product-selling for your company.
For example, period underwear company Snuggs uses UGC to showcase its products on real women. And then reposts that UGC within an email campaign:
19. Improve Customer Retention Rates
Customer retention is a great strategy to reduce the cost of customer acquisition because loyal customers are repeat customers.
That means they have a higher customer lifetime value and can even become your brand’s advocates.
And studies prove that acquiring new buyers costs 4-5 times more than keeping current customers.
Try these five actionable tips to improve customer retention:
- Loyalty programs and rewards: Implement a program where customers accumulate points for every purchase, which can later be redeemed for discounts or freebies. The anticipation of earning rewards can encourage more frequent and larger purchases.
- Personalization: Use data analytics to understand customer behavior and preferences. Offer product recommendations, personalized content, or special deals based on their history and behavior. Customers appreciate when a brand recognizes their individual needs. And a better customer experience leads more people to stay.
- Stay top-of-mind: Regularly communicate with your customers through newsletters, social media, or app notifications. But don’t spam them with frequent or pushy emails. You aim to reinforce brand recall and stay on top of their minds.
- High-quality customer support: Train your support team to be responsive, knowledgeable, and genuinely helpful. Consider offering 24/7 support, easy return policies, or other services that make post-purchase experiences smoother.
- Feedback: Regularly request and act on constructive feedback to improve products, services, or processes. Customers feel valued when they know their opinions matter, which skyrockets brand loyalty.
20. Use Referrals
Loyal customers typically refer your products and services to their loved ones.
They either make direct recommendations or pride themselves on your products on social media, thus creating social proof.
Pro tip: Level up your business model with a referral program.
Leveraging your customer network to make more sales dramatically reduces marketing spend. Plus, the new customers you get through referrals already have more chances of becoming loyal because of the personal recommendations they’re getting.
To get more referrals in your program, consider incentives like:
- Free products
- Exclusive offers
21. Leverage Marketing Automation
Marketing automation decreases customer acquisition costs by reducing marketing and sales expenses.
So, automate whatever process you think you can, such as:
- Lead scoring: Automatically assign scores to leads based on their interactions with your content, such as website visits, email opens, or content downloads. This helps prioritize leads more likely to convert, enabling sales teams to focus their efforts more effectively.
- Email marketing campaigns: Set up drip campaigns to nurture leads over time, sending them a series of emails based on predefined triggers or behaviors. Automate reminders or follow-up emails after certain actions, like cart abandonment or after downloading a resource.
- Social media posting: Schedule and post content automatically across multiple social media platforms. But also set up automated responses or alerts for specific mentions or keywords related to your brand.
- CRM Integration: Automatically update lead and customer information in your customer relationship management (CRM) software. However, ensure your sales teams have the most up-to-date information without manual entry.
- Customer support: Implement chatbots on your website or messaging platforms to handle common queries, book appointments, or guide users. This reduces customer service expenses while also ensuring you have someone 24/7 to help customers. And you can gather data more easily.
How Will You Lower Customer Acquisition Costs?
The 21 methods above help you reduce customer acquisition costs significantly.
And we have the successful case studies to back that up.
There’s a caveat:
You need an expert team and proficient tools to implement these strategies. So, take the time to educate your marketing team. Purchase the best software solutions and give them all the necessary resources to reduce your CAC.
inBeat can help you get started.
Book a free strategy call; we’ll discuss your situation and find personalized solutions to reduce CAC for your company.