You know that you need new customers so your business can grow. Your customers will leave your business eventually.
SaaS businesses lose almost 5% of their customers. Gyms lose as much as half of their customers each year.
Not only do you have to replace those customers, but you have to get more. Customer acquisition costs money, and your ability to find a customer acquisition strategy that’s inexpensive determines your profitability.
It’s not an easy position for any business to be in. You’re in luck because this article shows you tips for reducing customer acquisition costs for your business.
1. Measure Current Customer Acquisition Costs
It’s important to get an accurate measurement of your current customer acquisition costs. That allows you to measure improvements over time.
This is a pretty easy measurement. Add up the total spent on sales and marketing. Divide that number by the number of new customers.
That’s the amount spent to acquire a single customer. How much you should spend varies by industry.
A high-priced product or service can afford to spend more on customer acquisition than a business that sells a $10 product.
2. Have a Customer Journey
Do you know the customer lifecycle for your business? Your customers don’t suddenly become customers. They become aware of your brand, they have a need for your product, and they make the purchase.
Some customers take months to go from awareness to purchase. You need to document each step of the customer journey from how they become aware of you to how they become a customer.
That lets you see ways to narrow the gap from the first step to the last. If you can do that, you’ll lower your customer acquisition costs.
The most common way to do that is to create a marketing funnel. People come to your business through social media, search engines, or referrals. You have pieces in place to get them to sign up to your list and email them incentives to buy.
3. Create a Buyer Persona
Having a deep understanding of your buyers goes a long way towards reducing customer acquisition costs. A buyer persona is a mockup of your customers.
It’s a document that outlines who they are, what they do, where they live, and how much they make. A buyer person gets into the needs of your customers.
It reveals the emotional challenges a person has and why they’d use your product or service to solve them.
A buyer persona is what allows you to create effective marketing strategies to reach buyers. That drives down your customer acquisition costs because you can focus your efforts.
4. Improve Customer Retention
You probably heard that it costs a lot more to acquire new customers than to keep the ones that you have. Think about your business for a moment.
What would happen if you lost half of your clients every month? You’d have to figure out ways to get new customers just to break even every month.
That leads to burnout and you’ll have an unsustainable business.
Find ways to keep those customers while you onboard new ones is where you want your business to be. Turn your attention towards customer service to ensure your customers have a great experience.
5. Test Marketing Elements
Business owners and marketers take a set it and forget it approach. They don’t bother to test elements of the customer journey.
This is essential if you want to reduce costs to get new customers. For instance, you can test your ad copy, social media posts, and landing pages.
All of these elements are part of the funnel. You might find that your ads work fine, but your landing pages have low conversion rates.
Improve that, and you’ll lower your customer acquisition costs.
6. Leverage Retargeting
Retargeting is a way to reach customers once they leave your website. These are display or social media ads. You place a tracking cookie on your site and your ads get placed in front of visitors.
A retargeting campaign is cost-effective because it keeps your brand in front of prospects. They have the reminder to return to your site and finish their purchase.
7. Automation Lowers Costs
Automation allows you to reduce the time spent performing repetitive tasks.
You can leverage platforms like this CRM to reduce customer acquisition costs. Your sales team can keep track of customers and automate email.
That ultimately saves time, prospects get better service, and you lower customer acquisition costs.
8. Reward Loyalty
One way to lower your customer acquisition costs is to let your customers do the talking for you. They can go out and spread the word about your business.
There’s a good chance that your 10% of customers spend more and talk more about your business. You can reward them with small gifts or exclusive incentives.
For instance, you can create a referral program that rewards them for bringing new customers to you.
You can also create an affiliate program. That lets others do the selling for you. They assume the customer acquisition costs, and you give them a percentage of sales.
The most effective way to get referrals is to ask for them. Most customers are would refer people to you, you need to be direct and ask them.
Reduce Your Customer Acquisition Costs
How do you know if you have a healthy business? Your customer acquisition costs keep dropping, while your profits go up.
Reducing customer acquisition costs takes a lot of work. You have to understand your customers and how they find their way to your business. That lets you create a funnel and leverage strategies to lower your costs and make your business sustainable.
Did you find this article helpful? There’s plenty more, just head over to the Business section of this site for more tips.