By Syed Balkhi, founder of WPBeginner
When mapping out your business strategy, it’s essential to plan how you’re going to gain new customers at a lower cost. Why? Because you need to add to your existing customer base if you want your business to grow, and you need to do it within a budget. The trickiest part is figuring out how not to break the bank.
Budgeting for customer acquisition costs (CAC) should be part of any business model. As reported by Harvard Business Review, acquiring a new customer costs anywhere from five to 25 times more than retaining one. That’s a lot of money that could be spent elsewhere in your funnel.
If you’re looking for ways to reduce your business’s customer acquisition cost, here are three tips to guide you along the way.
1. Define your target.
If you haven’t a clue who your business caters to, you’re wasting time and money. A lot of it. Knowing who you’re catering to and what they want is the first step to lowering your CAC. By filtering out all the people your business doesn’t appeal to, you can focus on who wants your products and would be willing to buy from you.
The simplest way to do this is to flesh out buyer personas of people you’re targeting. A buyer persona is your ideal customer; he or she is a fictional prototype of the type of customers you sell to and gives you an idea of what you need to do in order to keep them coming back.
To create one of these profiles -- and you can definitely have more than one -- you need to flesh out the fine details of your buyers. If you have existing customers already, start with them. Do research on them: their background, interests, age range, job title, etc. On top of that, you have to make sure you’re utilizing the right social media platforms, producing the right kind of content and solving your customers’ problems.
These are all details that will tell you how to shape your business to match what they’re looking for so you know what to expect. When you know what to expect, you lower the costs of acquiring new customers.
2. Use retargeting.
Retargeting works by keeping tabs on visitors who lurk on your website but don’t make any purchases. It then displays your ads to them when they browse other websites so that your business gains recognition and traction. It makes visitors want to come back after seeing your brand and products repeatedly and staying in the back of their minds. When your ads continue to pop up, it encourages them to revisit your website and make a purchase.
This method turns window shoppers into paying customers and increases conversions. To get the most out of your retargeting strategy, segment your visitors into lists based on the types of products they viewed.
You want to make the shopping experience as easy as possible for people to navigate. Provide a clear call to action on your ad so they’re more enticed to visit your website. You also don’t want your ad to pop up so frequently that people think they’re being cyberstalked.
3. Implement A/B testing.
When trying to reduce your CAC, leave no stone unturned. You have to test different elements of your campaign and copy to figure out what’s bringing you the most leads, retaining customers and improving conversions because all of these things lead to a lower customer acquisition cost.
A few things you should use split tests on are:
- Landing pages
- Website copy
- Calls to action (CTAs)
When it comes to things you can test, the list is endless. Trying out variations of different color schemes, wording, image placement, etc. works well for many companies. Sometimes it’s as simple as changing one word that makes all the difference and convinces a customer to buy from you. You just have to keep up with the trial and error and track when conversions are doing their best.
There are so many different tactics out there you can implement into your business strategy to reduce the cost of gaining new customers. It’s helpful to revise every step of your funnel so you can see where costs could be lower and optimize where needed.
Syed Balkhi is the founder of WPBeginner, the largest free WordPress resource site that helps small businesses start their website.