9 Ways to Reduce Customer Acquisition Cost in 2024

In the dynamic landscape of 2024, businesses are continually seeking innovative strategies to streamline their operations and enhance their bottom line. One pivotal aspect of sustainable growth and profitability revolves around the effective reduction of customer acquisition costs.

As the business world evolves, so do the methods for acquiring and retaining customers, and in this blog, we delve into 9 actionable ways to reduce customer acquisition costs and drive efficiency in 2024.

What is Customer Acquisition Cost?

Customer acquisition costs (CAC) refer to the approximate total cost needed to get a new customer. This cost will involve the salaries of marketers or salespeople, the amount spent on marketing campaigns and social media marketing strategies, and advertising costs.

To determine your customer acquisition costs, divide the sum cost of the mentioned resources by the total number of customers acquired. 

You can calculate customer acquisition costs with this formula:

9 Ways to Reduce Customer Acquisition Cost

1. Leverage Marketing Automation

One of the best ways to reduce customer acquisition cost is to leverage marketing automation. Lower your customer acquisition costs using marketing automation and customer relationship management (CRM) tools.

Marketing automation lowers costs because fewer staff members must focus on menial tasks. A company can consider ways to gather contact details for targeted marketing down the line.

A communications software company may post gated content and write topics like “call dropping”. Through gated content, customers can be on email lists in return for the value of learning something new.

Automation enhances conversion rates and lowers acquisition costs because it spares other resources.

NotifyVisitors helps businesses automate their campaigns while leveraging AI to boost efforts and time. You can acquire new customers by sending the campaigns to your targeted audience without cutting your pockets.

2. A/B Test and Optimize Your Pages

A/B testing and optimizing your pages is one of the best ways for marketers to reduce customer acquisition costs.

By testing the different parts of the landing page, you can offer customers a more positive user experience (UX) with your website, leading to higher customer satisfaction.

The better the UX design, the higher customer satisfaction, which indirectly leads to higher sales.

Optimizing a website’s landing pages may include A/B testing product titles, forms, buttons, layout, and more. A/B is testing e-companies to check how minor changes could impact click-through rates on their website. 

When implementing changes on the company website, don’t make drastic changes as it may impact the user experience. Therefore, it is essential to assess how the results of your A/B testing will lead to higher rates of completed tasks. 

3. Retarget Customers

Retargeting is a useful tactic for companies that want to hold a presence in front of potential customers. Customers usually leave incomplete actions on websites and applications.

Therefore, a gentle nudge in the right direction can prompt customers to finish a purchase they may have left behind.

Retargeting is a way for businesses to persuade customers to reconsider the value they offer. The customers who visit a company website and stay are curious about the products offered.

Retargeting, among other strategies, can effectively enhance customer conversion rates. Retargeting is a valuable strategy because it enables companies to generate highly targeted campaigns for prospective customers.

To successfully retarget your leads, gather as much customer data as possible. You need to understand their behaviors, preferences, motivations, and more.

With this information, it will be more effortless to retarget prospects and convince them to purchase from you.

4. Prioritize Appropriate Audiences

Customers want brands to provide unique, personalized content and interactions in today’s digital spaces. Therefore, using the right marketing strategies and resources for the right audiences has become crucial.

You have to target audiences that want your products and services to reach the right audience. After this, engaging them on the best terms will become easier. 

For example, a user already signed up on your company’s membership site may not benefit from content targeted at new website visitors.

Companies must define their ideal customers before targeting them. Moreover, they can use tactics like buyer personas to give clear targets to benefit new customers. 

5. Improve Customer Retention

Customers who are happy with your products tend to spend more on a product than new customers. On average, repeat customers spend 67% more in the third year of their relationship with a company than they do at earlier stages.

It is easier to persuade existing customers of a company’s value than to convince new customers who have yet to interact with the company.

Forbes noted that it costs five times more to acquire a new customer than it does to retain current ones. Moreover, small gains in customer retention can lead to a 25% to 95% increase in profit.

The best way to lower customer acquisition costs is to increase a business’s repeat customer rate, purchase frequencies, and average order values.

Use customer feedback loops, loyalty programs, and customer education programs. All of these can be collected easily via WhatsApp automation

6. Build a Community

Building a community of people who care about what your brand stands for is essential for any business.

The community goal is to create a space where people in your industry can interact with one another, ask questions, and understand each other.

The easiest way to start creating a community is to develop content on social media platforms where your target audience is. This depends more on the business type you’re handling.

For instance, if you’re in the B2B space, Twitter or LinkedIn might be a good place to begin. The goal here is to consistently create educational, insightful, or entertaining content on these platforms.

With consistency and patience, you’ll slowly develop a following and a community of people who believe in your actions.

But to get this right, you must focus on supporting your community. If you go on social media and constantly try to sell your products and services, you will need help building a valuable following.

7. Leverage Co-Marketing Campaigns

Co-marketing campaigns are a cost-effective way to facilitate brand awareness and reach new customers by leveraging the audience of another business.

By collaborating with a related company or hiring influencers, you can leverage their existing network while introducing your products or services to a broader audience.

The goal of a co-marketing campaign should be to create a win-win situation for both your company and the one you are partnering with.

To begin with co-marketing, first recognize potential partners with target audiences similar to yours. One way to do this is to ask your existing customers what other products or services they use.

For instance, if you’re a SaaS business, you can ask your customers what other SaaS products they utilize — this shows a mutual audience.

The next step is to design attractive offers and incentives that will encourage another company to join in on these campaigns — anything from doing a newsletter swap to giving a shoutout on social media.

With a little effort upfront, co-marketing can amplify your message without spending money — making it a potent tool for any business.

8. Focus On Growth Loops.

Traditional marketing says to focus on funnels. The issue with funnels is that they make marketers believe in growth in linear terms. To get the expected outcome at the bottom of your funnel, you must keep investing resources at the top.

However, if you begin thinking about gaining customers in terms of growth loops, it gives you a distinct perspective on how some of the largest companies in the world grow.

Growth loops force you to believe in how acquisition, product, and monetization work together to create compounding growth. The difference between a funnel and a loop is that the outcome can be used as an input to fuel more growth.

For instance, a referral program acts as a growth loop, not a funnel. A potential customer comes to your website, buys your product, and loves it enough to refer a friend.

That friend then visits your website, purchases your product, and loves it enough to refer a different friend. The new friend visits your website, and the cycle continues.

If you think about building marketing initiatives in terms of growth loops, it can assist you in creating compounding growth in your company and lower your overall marketing CAC.

To get started with growth loops, determine what kind of rewards would give your existing customers the most incentive to return. 

With some thoughtful planning and implementation efforts upfront, growth loops can help navigate repeat sales while building solid relationships with your current customers — making them an excellent tool for any business looking to grow sustainably.

9. Start a Newsletter

Staying on community-building newsletters is a fantastic way to create a following and nurture your community to the point where they’ll trust you enough to purchase from you.

The great thing about newsletters is that they are all sent via email. You’re not at the whim of social media algorithms or ad platforms fluctuating their ad costs.

Rather than “renting” space on third-party sites, you possess your community through an email list.

To start with a newsletter, you must first decide the type of information you want to send readers. Some examples include curating content in your niche, giving valuable insights on trends in your industry, or simply giving updates on what your company is working on.

Like building a community, you want to focus on giving more than taking. Don’t send many company updates and information about your products or services.

Keep 80% of your newsletter content focused on solving your reader’s problems without trying to sell them anything.

Once you have a content strategy, use a newsletter platform to create eye-catching visuals, polls, surveys, and templates that suit your brand voice and tone.

Conclusion

After learning the top 9 ways to reduce customer acquisition costs, businesses can gain valuable insights into the cutting-edge practices and methodologies tailored to mitigate customer acquisition costs, foster sustainable growth, and propel success in the ever-evolving business landscape in 2024.