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Significant business growth requires a delicate balance between acquiring new customers while remaining focused on existing customers. Over the last few years, the cost of revenue has increased by almost 60%. This has put tremendous pressure on marketing departments to optimize the cost of customer acquisition.

Reduce Customer Acquisition Cost (CAC)

The Customer Acquisition Cost (CAC) includes the cost of audience acquisition on marketing platforms and cost of audience conversion on the owned properties, like a website. Both have a strong correlation as well: If you try to lower the cost of audience acquisition, it results in a reduction audience quality, which can directly affect conversions and revenue.

Likewise, lowering the cost of conversion lowers customer engagement, and significantly diminishes the expected return on spend value acquiring high-quality audiences.

The Right Way to Reduce CAC

A critical step to increase the efficiency of customer acquisition spend is to identify and acquire the right customers. The most efficient way to achieve this is with a holistic strategy with equal focus on:

Audience Segment

The audiences that value your offering and have high likelihood to convert

Audience Segment

The audiences that have high loyalty and repeat purchase propensity

Audience Segment

The audiences that are in the market or have interests that align or are closely adjacent to the value offering

Such a strategy requires both the contextual and behavioral understanding of your audiences.

Contextual Understanding

Contextual Understanding

The following understandings, and using them to generate segments, can hone your targeting criteria and budget towards the most relevant

  • Third-party procured data that enhances the understanding of existing customers, including demographics and areas of interest
  • Cost-free, macro-economic and population level data that adds to the rationale behind a known behavior
Behavioral Understanding

Behavioral Understanding

Based on the below data sets, it’s possible to segment and find customers with relatively higher propensity to purchase in a specific number of days.

  • Transaction behavior like type, size, and frequency
  • Touch-point interaction behavior including website click stream, email campaign response, or webinar attendance
  • User generated content like social media, survey responses, support interactions, and chats, that allow you to further understand customer attitude