What is CAC ?

What is CAC? How to reduce CAC with these tips?

You already know how costly it is to acquire new customers. Therefore, tracking metrics such as CAC (Customer Acquisition Cost) is essential to know how to optimize and reduce this cost.

What is CAC?

CAC represents the total marketing and sales costs to acquire a customer — one of the most important metrics! After all, without customers, there is no revenue; without revenue, there is no business. Then, calculating the Customer Acquisition Cost is essential to analyze whether revenue is being generated above it since there is a very close relationship between CAC and the company’s profitability.

How to reduce CAC?

Check out the best strategies to reduce your business CAC!

Improve Your Website Conversions

You can generate immense traffic to your business website. But the question is, how many of those visitors are converting? Unqualified traffic doesn’t convert, and you’re throwing money away without the conversion. Monitoring, testing, and improving your conversion rates is the surest way to lower your Customer Acquisition Cost. Because? The more people you can push to the bottom of the sales funnel and convert them into customers, the lower your CAC will be. Does it seem obvious? And is! However, not everyone can do this correctly.

Use the 80/20 rule

Also known as the Pareto principle, the 80/20 rule theorizes that 20% of your efforts are responsible for producing 80% of your results. In business, this can be applied in many ways! For example, 20% of your marketing projects generate 80% of your revenue.

Implement Ideal Customer Profile and Personas

When marketing your product or service, don’t shoot in the dark! Marketing actions need to be objective about who they should reach. For that, you can use Pareto here again: 20% of your customers generate 80% of your revenue. In other words: use what you know about your 20% most loyal customers and use that knowledge to attract and retain a new audience.

Finding out who your ideal customer is and developing that persona is very important because she is the one who will drive your entire marketing and content strategy for your business. Don’t confuse these techniques with targeting, which is for targeting your niche! Persona is much more specific: it is a semi-fictional representation of your ideal customer with name, occupation, shopping habits, and other data developed through research.

 Reduce Churn Rate

If you want to reduce your business’s CAC, seriously consider reducing your churn rate! The churn rate is the rate of customers lost by the company in a given period. There is no logic in thinking exclusively about reducing Customer Acquisition Costs without optimizing your loyalty — so that you extract maximum revenue over time through new business with the same customers, paying your costs, and generating more profits. Therefore, reducing the churn rate is not directly related to the reduction of CAC, but it is an optimization of the results in revenue and profit generation for the company.

Do Digital Marketing

To reduce CAC, you must be relevant to potential and current customers. This can only be achieved through a strategy that attracts potential customers with the ideal profile, generates conversions and sales, and delights customers, reaching after-sales. Digital Marketing is a methodology that connects all the dots, integrating channels such as social networks, search engines, and email, and optimizing ads and SEO, to expose your positioning and generate the desire to have your company as a supplier.

The importance of calculating your CAC

As you can see, there are several strategies to reduce CAC, and, in any of them, you need to make a consistent plan to achieve good results. To help you, we have created the CAC Calculator Worksheet! With it, you can calculate your Customer Acquisition Cost and plan how to increase your profits.

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