How To Lower Customer Acquisition Costs

Customer Acquisition

A business’ survival depends on its ability to acquire and retain customers and clients. The world of online businesses and digital marketing has revolutionised the means and methods that businesses can utilise to grow and prosper. In this blog post we will discuss why it’s important to understand your current costs of acquiring new customers and different strategies to lower your customer acquisition costs through digital marketing means.

Current Customer Acquisition Cost

Customer Acquisition

Firstly, we encourage you to calculate what your current customer acquisition cost is. This way you can get an understanding of how effective your marketing efforts are in comparison to your goals and industry. To calculate your Customer Acquisition Cost (CAC), you need to add all of your associated costs of acquiring new customers including advertising, salaries or wages of your marketing and sales teams, creative costs, technical costs and other related costs for a particular time period. Then you will divide this total by the number of customers acquired for the same time period. The number alone won’t tell you much, we recommend comparing it to your industry (you can find this with a simple Google search) and your customer lifetime value. Your CAC might seem high when compared to the sale of one product or service, however if your average customer become a loyal purchaser, then the CAC reduces significantly.

You can also calculate your CAC per marketing channel to determine which is the most profitable to direct a higher percentage of your budget there. Just keep in mind that it can be difficult to track where your customers came from unless you track your conversions, and it is possible that a combination of your marketing efforts got them over the line.

Boost Conversion Rate

If you are looking for ways to lower your CAC, it’s important to first get clear on who you are targeting to make sure your marketing efforts and messaging are suited to your ideal customer. Diving deep into your buyer personas can help in this process. A great way to lower CACs is to boost your conversion rates. There’s a variety of ways to achieve this depending on what your current strategies are. For example, if you find that your social media does contribute to acquiring new customers, you can direct more of your time and energy into improving your strategy.

Customer Acquisition

This may involve posting more high-quality content each day, jumping on new social media platforms in the early stages to leverage the untapped opportunity, like Clubhouse in 2021, share more about your business through stories and videos to create a stronger relationship with your audience and the like. Another way to boost your conversion rates on social media is to use retargeting ads on Facebook and Google. Depending on the price of your product or service, your audience may need 7 or more touch-points before they purchase, this is why it’s important to always include clear calls to action in your content. If you can stay top of mind, they would be more likely to think of you when they’re in the buying mode.

Another great way to boost your conversion rate is to improve your website’s SEO. By ranking on page one of Google, your website is more likely to be viewed by your target audience as it’s rare that searchers look past the first page. Strategies to improve your website’s SEO could include updating your copy, making your site mobile friendly, and posting regular blog posts.

Automate Your Marketing

Once you are happy with the effectiveness of your digital marketing in converting customers, a great way to lower your CAC is to automate the processes. This means that you will be able to achieve the same type of results with less effort and resources like manual labour, resulting in a reduction of costs and a lower CAC. Do make sure you only automate your marketing for processes that lead to customer acquisitions as if you automate a process that is ineffective, it will do the opposite and increase your costs.

Customer Acquisition

Ways to automate your marketing include automating your lead generation, lead qualification and lead nurturing. If you’d like to read a more in-depth blog post about this, feel free to check out our How To Master Lead Generation In Three Easy Steps blog post. To direct your audience down your funnel, you could offer free trials, discounts, provide upfront value in the form of free eBooks and anything else your ideal customer would find valuable. The great thing is that these only need to be created once and can be utilised for various different marketing tactics.

Another way to automate your marketing while determining what works best to lower your CAC is by A/B split testing your creative and copy. You can apply this to your email campaigns, landing pages, website copy and calls to action to determine what works best for particular audiences.

Get Creative

If you have been in business a while and are successful at implementing the above strategies but want to try something different, it’s time to get a little creative. We’ve found that a great way to lower customer acquisition costs significantly is to implement referral programs.

Customer Acquisition

When we notice that particular customers are constantly happy with the services, we incentivise them to refer us to other business owners they know by offering them discounts, for example, a free month of our services, or value-added extras at no cost. You could also look deeper into your customer retention rates and determine ways to improve this. By understanding the reasons you lose certain customers, you can implement strategies to minimise this. It costs less to retain customers than it does to find new customers. You may want to enhance the value you provide to your existing customers to persuade them to become loyal customers and advocates for your business.

If you are looking for a marketing partner to assist you with implementing digital marketing strategies to lower your customer acquisition costs, feel free to get in touch with us at, we’d be more than happy to chat to you about how we can help your business grow.

Customer Acquisition

(02) 8006 4212

Sydney, Australia