Ran Mullins By Ran Mullins • September 8, 2021

Tips to Reduce Customer Acquisition Costs & Meet Your Marketing KPIs

It's never worth it to meet your marketing KPIs if the customer acquisition costs are too great. That's a Pyrrhic Victory — a battle won at too high a price.

But if we're not aware of those costs, it's harder to understand if it is worth it and where you need to spend your money to get the highest MROI.

In a previous blog, we established CAC as a crucial KPI to track in B2B technology because industry benchmarks suggest your average customer acquisition costs are naturally high. We need to know what these costs are to determine if meeting our marketing KPIs is worth the price.

This blog will go more in-depth on this metric and explain how to reduce CAC and drive leads.

See the Whole Picture

Always look at sales and marketing expenses as a whole since cutting certain costs in marketing could mean the sales team has to pick up the slack. At the same time, if the sales budget cuts back in certain areas, marketing may have to work harder, sending more leads to achieve sales KPIs.

CAC always includes both. That's critical for marketing-sales alignment.

Relate CAC to LTV

To understand if CAC is too high, you must compare it to LTV (customer lifetime value) and execute a strategy to increase LTV.

In the B2B technology industry, the ideal LTV: CAC is 3:1 to 4:1. In other words, if your LTV is $700 and you spent $200 acquiring that customer, you're right where you need to be. Your customer acquisition costs are probably not too high. But that does depend on your business model, so don't consider that figure set in stone.

Even if your CAC isn't exceptionally high, you can certainly lower it.

Increase Your Conversion Rate

The conversion rate is easy to measure and track over time. You can also manipulate it to see instant results and learn from that testing. Every time a customer clicks an ad and fails to convert, that's money spent with no return. That spend goes into your CAC, raising it without other important B2B marketing KPIs going up proportionately.

To improve your conversion rates, audit your content and test assets like landing pages and CTAs. You can take this further by testing different versions with different buyer's personas and target audiences.

Unfortunately, only around 52% of companies test their landing pages. And only 56% of companies regularly perform A/B testing of any kind. Not surprisingly, only 22% of businesses say they're happy with conversion rates.

Use B2B Marketing Automation

Marketing automation software can significantly improve the number of leads you send to sales and the quality of those leads. Many automation tools perfect the timing of the ideal message to the right person.

Common sense tells you you're much more likely to respond to a restaurant ad when you're actually hungry. And if it's a restaurant that has food you like, even better.

Automation can help you achieve this elusive sweet spot in marketing through your ads, emails, social media posts, and website content. But is automation a Pyrrhic Victory? Or does it lower the CAC, our goal here?

On average, 40-80% of companies’ total expenses go towards employee salaries. Even if we throw out the value of perfect timing with marketing automation, if it takes a human 10 minutes to do what it takes automation software to do automatically and repeatedly with little human oversight, that's a significant reduction in customer acquisition costs. Your employees likely have 100's of these 10 minutes spent doing things automation could do faster and better.

We're, of course, assuming your marketing team could find a better use for that 10 minutes. And in most cases, they'll be happier for it. Automation replaces repetitive, monotonous tasks that humans tend to despise anyway.

Leverage Existing Customers to Bring in New Customers & Keep Customers

According to Nielsen research, 92% trust people they know as a legitimate source of information about a company. 70% trust a stranger who uses your product. Compare this to 58% of people trusting what you say about your product on your website and even fewer (47%) trusting your paid ads.

Happy customers become your brand ambassadors. Others develop perceptions based upon it. Those social proof-driven "perceptions" increase LTV and lower CAC at the same time. But often, you need to put in a little work to amplify their message. 

Automation tools can help you here as well. Use them to make this appreciation for your B2B technology more visible with:

  • Social media engagement
  • Sharing of emails
  • Positive reviews
  • Blog post and video comments

By keeping your customer acquisition costs in check, you’re able to meet your marketing KPIs and corporate goals while also maximizing your budgetRbookend2

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