To run your business successfully, you need to generate new leads and, at the same time, maintain the current audience. Therefore, businesses invest quite a lot in their marketing campaign with the hope of attracting new customers to their business. But, the effectiveness of the marketing campaign is not 100%.
Out of all the impressions marketing campaigns have brought, only a handful of the audiences actually get converted. This is where the concept of Customer Acquisition Costs (CAC) and Cost Per Acquisition (CPA) is coined.
If you are running an eCommerce business, these two metrics play an important role in determining the revenue of your business. To know how businesses use these two metrics for their decision-making, check this out.
What Are Customer Acquisition Costs?
Customer Acquisition Cost is the total cost invested by the company to acquire a new customer. It generally includes the following:
- Advertisements cost.
- Salary of the marketers.
- Cost of the salesperson.
Calculating your CAC really helps you get a number that defines your investment in marketing and ensures you are making the right business decision. If you are thinking of why does calculating CAC matters, Then think about it, the cost of acquiring a customer is more than what you can get from the customer; your company will be out of business soon.
Customer Acquisition Strategies For Sustainable Growth
While the traditional CAC strategies like aggressive advertisements and offering discounts are now becoming expensive, you need to find different ways to reduce the cost of CAC and revamp the financial flow of the business.
1. Customer Referrals
You might not be aware of the fact that there is no better Customer Acquisition tool better than your current customer. However, with the digital platform, most people have an online presence and take online suggestions more seriously than other forms of suggestion.
Hence, if you can somehow convince your customers to refer your business to others, you will see sustainable growth in your business.
2. Brand Communities
Today, people want to be treated like someone special. And instead of being approached by the marketers to sell their products, they want to be treated as if they are a part of the community. This is why brands are investing their time and energy in creating communities to interact with their audiences.
Brand communities offer a great platform for the business to sustain their business. The more members you have on the community page, the more members found your business credible and want to join the community.
What Is Cost Per Acquisition?
Cost Per Acquisition is commonly known as cost per action in the market. It is a cumulative cost of the custom talking action and converting themselves as paying customers.
Unlike any other marketing metric, CPA is a financial metric used by marketers to measure the revenue impact. CPA uses the following marketing mediums:
- Social Media.
- Content Marketing.How To Reduce CPA
How To Reduce CPA?
Most marketers think about scaling their business by traffic optimization. But, forget about one simple strategy that can give an instant revenue boost to the business, Cost Optimization.
Here are a few best practices that will help you reduce CPA.
1. Landing Page Optimization
You must understand that your landing page is one of the key nodes of your marketing campaign. It is the first thing your customer sees after clicking your ads. Hence, optimizing your Landing page will ensure that most customers end up converting to paying customers.
2. Check-Out Optimization
The average rate of check-out shopping abandonment is 68%. And the major reason for the abandonment is the hidden charges. So if you can optimize your checked-out phase by keeping everything transparent, you will be able to lower the CPA.
Retargeting is a method of targeting the same customers that have bounced back from your website. Your team needs to follow the website traffic closely to ensure every customer is served better. Even if the customer bounced back from your site, you must try to reach out to them.
That’s it for this article. We have tried to keep everything as concise as possible to be easy for you to understand. Yes, you might find that some of the information is not in here, but that was just baggage information. If you want to know more about CAC and CPA, contact us.