4 Ways to Reduce Your Customer Acquisition Costs

Nov 2, 2017 4:53:56 PM / by Sterling

Customer acquisition is vitally important for any business, but it can be tricky to get just right. In order to be viable, businesses need to find the perfect balance of the cost to acquire a new customer, and the ability to monetize the customer. You can find your business's customer acquisition cost using this simple formula:

Total Cost of Marketing/Total Number of Customers

Customer acquisition cost has even been called the “startup killer” because “the cost of acquiring customers often turns out to be higher than expected and exceeds the ability to monetize those customers”. It’s often difficult to find a balance, because if you spend too much money on marketing you risk running out of funds, while spending too little could result in too few customers. Here are some tips to get the balance just right:

Focus Your Marketing Efforts

It seems obvious, but more effective marketing will lead to more customer acquisition for the same cost. They key to optimizing your marketing efforts is find your target audience, and match your marketing efforts to this group. Narrow your focus to the people who actually want to know about and use your product or app, and then make sure that your message meets them where they are. Finding your target audience will also help build a community around your business, and make for more loyal customers.

Improve Your Website or App Conversions

What's the use in spending money on marketing if the users don't end up making a purchase once they come to your website or app? One surefire way to reduce customer acquisition costs is to improve your conversion rates. This will cause the money spent on marketing to go farther, and thus reduce the total cost of customer acquisition. You can increase user retention using retention analytics, where you look at user behavior and improve your business based on what people use more or less.

Use Your Existing Customers

There is no one who knows how to market your business better than a loyal user. They truly understand the customer...because they themselves are customers. They understand your target market because they are your target market, and they’re usually well connected to other potential customers. By effectively letting your customers take on some of the marketing through word of mouth and social media sharing, you can vastly reduce the cost of acquisition. The beauty of word of mouth marketing is that it is highly trusted, and can have little to no costs attached to it. One example of this is a referral program, which is a great way to incentivize existing customers to spread the word about your business or app.

Analyze Your Acquisition Strategy

Lastly, it is important to analyze your acquisition strategy to see if it's working, and what you may need to change. Look at whether your marketing is effective, who your customers are, and how you might further focus your marketing efforts. Similarly, check your conversions and user behavior often to maintain an understanding of what your customers want, like and dislike. Most importantly, remember that analyzing is an iterative process. Your users, user behaviors, and the climate of your business may change and its important to always be checking and improving.


Topics: startup, user retention, Blog, business, customer acquisition cost, Latest Post, marketing strategy


Written by Sterling

Subscribe to Email Updates

Lists by Topic

see all

Posts by Topic

See all

Recent Posts