8 Simple Ways to Reduce Customer Acquisition Costs

No matter what size your business is, your budget is one of your most important considerations. We constantly look for ways to reduce that budget, from technology solutions such as a call management system to better internal processes. 

Budget can be especially important for small business ecommerce where every cent counts. So ensuring consistently good ROI for marketing can make a major difference to profit margins. 

In order to get conversions and sales, we need customers. And to get customers, we usually have to spend money; on marketing, advertising, etc. We call these customer acquisition costs (CAC) and ensuring they’re as low as possible while still giving a good return is something many businesses struggle with. 

CAC is just one part of the overall picture in regards to your costs and you should also consider factors such as cost per order (CPO) to get a better idea.  

Our 8 top tips to reduce customer acquisition costs

There are many different strategies that can help reduce CAC, but we believe these eight tips will get you started in the journey to reduced costs. 

1. Focus

If you throw a budget around with no thought to targets, your CAC will be high. The first step to reducing costs is to have a clearly defined target for your business. Once you know what your target is, formulate your ideal buyer persona and then focus your marketing and sales strategies on that persona. Knowing how to use customer data platforms can make a major difference. 

The better defined your target is, the more likely your marketing tactics will bring results. And that focus means you get a higher ROI than if you have no buyer persona. Find ways of converting those ‘casual browsers’ to loyal customers. 

2. Retention

Greater lifetime value from a customer offsets the CAC spent on that particular customer. So not only should you focus on acquiring new customers but also on customer loyalty and retention. Keeping an existing customer is cheaper than acquiring a new one so this should be something you put a lot of effort into. 

Monitor your metrics on customer retention and analyze what makes, and keeps, people happy. The added bonus from loyal customers is that their reviews and recommendations can bring new customers, something that has net zero CAC. 

3. Partnerships

Another good way to reduce your CAC is to ‘spread the workload’. What that means is collaborating with other businesses, influencers, or brands, where you have some common ground and where joint or affiliate marketing is a great strategy. This can help create extra traffic and drive customers to your website

And remember, an affiliate partner does not have to be a large business, smaller partners can also make a significant contribution. 

4. Automation

We now use automation in many areas of our businesses, from a chatbot on your website to an auto dialer in your contact center. Email marketing is one area where automation can drastically improve your revenue and thus also significantly reduce your CAC. 

75% of marketing professionals are already using some form of automation in their work. And it is estimated that spending on marketing automation will reach $25.1 billion by 2023. You can use it in email marketing, website prompts and reminders, and other areas. Not only can it help reduce your CAC, it also saves time for your human staff so they can focus elsewhere. 

5. A/B testing

It’s important to understand that customer acquisition is not just about what you do with your marketing and advertising. It is about ensuring that once a user visits your site they have a positive experience that convinces them that they should become a customer. A/B testing helps you test out different elements of your site and also different elements of your content and campaigns. 

This can take time in finding the ‘winning formula’, but it is a very worthwhile exercise as it offers several benefits. It improves customer retention, it helps convert leads to sales, and it encourages customer retention. Optimizing your landing pages can include testing elements such as your visual content, CTAs, content, layout, fonts, etc.. 

6. Pareto principle

The Pareto Principle is an economic theory that states that 80% of your final results comes from only 20% of the effort you put in. What this means in real terms is that you should be analyzing your figures to see where exactly the bulk of your business is coming from. 

If you know what areas give you the highest levels of conversions and sales, you can then focus more efforts on those areas. And if you identify areas that give you very low, or even zero, results, then you can consider reducing or even eliminating spending in that area. 

7. Specialization 

If you are a larger company, or if you are growing, consider breaking teams into smaller, more focused units. While a startup may have limited manpower, bigger and growing companies can benefit from this more detailed focus and it can lead to lower CAC.

For example, splitting your staff into an inbound lead team, an outbound generation team, and both internal and field sales teams may lead to increased sales and revenue, which in turn will help reduce your overall CAC. 

8. Google Ads

A great Google Ads campaign can not only reduce your CAC, but also lead to increased conversions. This involves work in a number of areas. Ensure you are using keywords targeted to your buyer personas, and carry that tactic over into your ad copy and your landing pages.

Those keywords should also reflect what product or service you are promoting and any attached offers. For example, if you offer free shipping on a product, include ‘free shipping’ in the headline of your copy and also in anywhere else you are marketing. You want a message that is cohesive wherever you use it that gets customers to come onboard with you. 

The takeaway

Reducing elements of our budget is something we all want. By looking at things like an inbound call center solution or better marketing strategies, we can achieve that with comparative ease. 

CAC is just one element in reducing your overall budget. There are other factors to consider, some of which will impact on your CAC. But, the important thing to realize is that it is a learning curve. You will not reduce your CAC overnight and will have to revisit this factor constantly in your business’s lifetime. 


Author Bio:

Victorio Duran III –  RingCentral US. Victorio is the Associate SEO Director at RingCentral, a global leader in cloud-based communications and collaboration solutions. He has over 13 years of extensive involvement on web and digital operations with diverse experience as web engineer, product manager, and digital marketing strategist.

Mercy - CBNation

This is a post from a CBNation writer. CBNation is a Business to Business (B2B) Brand focusing on increasing the visibility of and providing resources for CEOs, entrepreneurs and business owners. CBNation consists of blogs(, podcasts ( and videos ( CBNation is proudly powered by Blue 16 Media.

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