Customer Acquisition Cost: 35 Ways To Reduce Your Cost Of Customer Acquisition

Customer acquisition cost (CAC) is the most important metric that determines the failure or success of any business.

Calculating your CAC is easy:

  • Take the total amount spent on acquiring more customers.
  • Divide it by the number of customers acquired in the period the money was spent.

And you’ll have your customer acquisition cost.

In this article, I will show you 35 ways you can keep your customer acquisition costs very very low.

1. Apply The 80/20 Rule To Double Your ROI And Reduce Your Customer Acquisition Costs

As a business owner or marketer, your daily life is filled with a lot of busy work. Most of these works are time wasting and unproductive.

When you do them, it looks like you’re marketing your business, when in fact they do not have any significant positive impact on your business.

You have to cut out those marketing activities that give you little to show for your efforts.

Instead of wasting your time on things that give you little returns, you should invest more of your time and capital on things that give you the highest returns with less investment.

This is where the 80/20 rule comes in.

In fact, the 80/20 rule doesn’t apply to marketing alone. It applies to all efforts (activities).

The 80/20 rule is simple:

20% of your effort produces 80% of your results. In other words, 80% of your effort produces only 20% of your results.

You can apply the 80/20 rule to your business by:

1. Focusing on the most effective marketing channels that give you the highest returns on investment

2. Focusing on the 20% of customers that drives 80% of your revenue

Applying the 80/20 rule to your marketing endeavors would allow you to greatly reduce your cost of customer acquisition.

2. Develop Buyer Personas To Target The Ideal Customers

How can you market to the right group of people without knowing who they are and what they do?

It’s impossible.

You have to know your ideal customers inside out.

Who are they?

Where do they live?

What’s their education level?

Are they married, or single?

Do they have kids?

What’s their average yearly income?

These are some of the important details you need before you start marketing at all.

Without a buyer persona, you’ll be marketing without a clear direction. That’s a silly marketing mistake that could increase your customer acquisition cost.

When you develop a buyer persona and use it, you’ll create contents and messages that appeal to your ideal customers.

Creating a buyer persona lets you understand the needs and interests of your customers. It also helps you create contents that caters to those needs and interests.

Creating and using buyer personas will help your business generate better leads which would, in turn, reduces your customer acquisition cost.

How can you create buyer personas for your business?

HubSpot created the MakeMyPersona tool. It’s an interactive web tool that generates buyer personas for you once you answer a series of questions about your ideal customers. Use this tool to start creating your buyer personas.

3. Use Marketing Automation Softwares To Reduce Your Customer Acquisition Costs

As you know, customers are the lifeblood of a business.

When you first start your business, you’re able to forge a 1 on 1 relationship with your customers.

As your business starts to grow, it’s almost impossible to maintain a relationship with everyone.

Your company marketing programs would also become so big that they can’t be managed through Excel, Outlook, and Word. You may want to hire more marketing specialists at this point, but it will only lead to spending more on customer acquisition.

So what should you do?

This is where marketing automation comes in.

According to Marketo :

Marketing automation is a category of software that streamlines, automates, and measures marketing tasks and workflows so that companies like yours can increase operational efficiency and grow revenue faster.

And here’s a simpler definition from Techopedia :

Marketing automation is the use of software and Web-based services to execute, manage and automate marketing tasks and processes. It replaces manual and repetitive marketing processes with purpose-built software and applications geared toward performance.

Marketing automation is so effective and efficient that you should begin to see its benefits within 3 to 6 months of implementation.

Marketing automation helps you with all the things you need to better nurture and convert leads into sales. From email marketing to analytics and reporting, and to marketing campaign management.

And in fact , 32% of companies who used marketing automation said they are very successful with it.

59% of companies said they are somewhat successful with it.

While a merely 9% are said to be unsuccessful with marketing automation.

What makes market automation so powerful is that it reduces the number of human work required to convert a customer.

4. Time And Shorten Your Sales Cycles To Reduce Your Customer Acquisition Costs

The longer it takes to convert your leads to customers, the higher your customer acquisition cost will be. Therefore, you need to shorten your sales cycle to increase your ROI.

How would you do that?

It’s simple:

You need to stop attracting the wrong people to your business website.

For example, it is better to sell your aspirin to people who are in pain right now.

Attracting people who might experience pain in the future is an example of increasing the sales cycle.

Sure, this group of people might buy your product when they experience pain in the future, but your cost of customer acquisition would be much higher in this case.

For example, below is the sales cycle of Reps , a real estate agency based in Campbell, California:

As you can see, it only takes two hours to two days to convert a lead into a customer.

5. Focus Your Acquisition Efforts On A More Specific And Targeted Customer Segment

Imagine you’re trying to market a content management system (CMS) that competes directly with WordPress. Well, good luck with that.

WordPress has the attention of the masses and almost every new blogger or site owner want to start on WordPress. You can’t blame these people because the whole web is painted with WordPress.

Marketing your CMS as a direct competitor to WordPress would cost you a lot per customer acquired.

You need a different smart strategy to market your CMS while keeping your customer acquisition costs as low as possible.

What smart strategy is that?

Imagine you’re marketing your content management system (CMS) as the best CMS for startups. That helps you stand a better chance to steal some market share away from WordPress.

Maybe after capturing the startup market, you can then expand to other customer segments like fashion bloggers, NGOs and eCommerce.

But trying to target everyone, in the beginning, is a sure recipe for failure.

I don’t appeal to everyone well. I appeal to fewer people in a much stronger way. That’s what fandom is to me, and what creates fans for everything I make. Felicia Day

6. Create A Comparison Matrix With Appropriate Check Marks

How does your product compare to your competitors?

Your visitors will always want to know something. They will surely evaluate the price of your product, its value and many other things.

Instead of leaving them to evaluate your business by themselves, why not help them evaluate it right there on your page.

You shouldn’t just claim you have the best product. Show customers why you’re the best.

For example, web hosting company, iPage has a comparison page on their website . This comparison page helps iPage show prospects why they should host with them because they’re one of the most affordable web hosting companies.

Help Desk Software company, Groove has comparison charts that compare their product with competitors like ZenDesk, Desk.com and Freshdesk.

By just looking at the comparison table, you immediately become aware that Groove is cheaper than ZenDesk, Desk.com and Freshdesk.

7. Display Customer Success Stories On Your Website

Before your website visitors can buy your product or use your service, they want to see that real people are using it and having real success with it.

Displaying customers’ success stories assure prospects that your product will deliver its promises.

For example, Salesforce has a page dedicated to sharing their customers’ success stories .

Don’t start promoting your website because you think your product is great. You have to prove that you have happy customers who are currently enjoying your product and service. It is after doing this prospects can fully start trusting you with their money.

Just by creating ads, landing pages or contents that entice people to buy your product is not enough. You need more!

Look at the way HR Software company, Workday uses customer success stories on their home page:

When you have a world famous company like TripAdvisor as your customer? It will surely boost your conversions, thereby reducing your customer acquisition costs.

8. Use Partnerships To Slash Your Customer Acquisition Costs

What if I tell you an effective customer acquisition strategy that requires zero capital and time investment?

It’s partnerships.

Many successful companies used partnerships to drive a lot of customers to their business.

For example, ecommerce payment system, TrialPay used several key channel partnerships to grow from zero to 10,000 clients in two years .

Growing With Partnerships

“Even though Dropbox depends heavily on word-of-mouth growth, it’s huge for it to be installed on every Samsung phone. That’s a massive channel partnership for them. It grows the business beyond standard sales and marketing models.” —Alex Rampell, co-founder of TrialPay

Today, Hilton often books the majority of its rooms through channel partners like Expedia, Orbitz, travel agencies like Carlson Wagonlit, American Express, and airlines that cross-promote hotels.

Marketing Software company Moz has a list of partners on their perks page .

On this page, you’ll see successful marketing companies like WordStream, BuzzStream, Distilled U and Buffer.

Why are these companies on this page? It’s because it promotes their business. It gets them quality customers for cheap which reduces their customer acquisition cost.

9. Grow Your Email List

Email marketing offers the best ROI than every other marketing channel.

Email has an ROI of at least $40 for every dollar invested.

SEO is the second most effective marketing channel that offers the best ROI but it’s only $22.

The gap of $18 between the first (email) and second (SEO) is too much to ignore.

You need to focus on building your email list if you’re really serious about slashing your customer acquisition cost.

With email marketing, you can sell to the same customers more than once. Email marketing also allows you to continue forming deeper relationships with prospects until they become customers.

Swedish multinational retail-clothing company H&M does an awesome job collecting their customers’ emails with the below pop-up that shows up when you visit their site.

10. Publish 10x Contents

First, what is 10x content?

A 10x content is any form of online content e.g. videos that can’t be matched by your competitors.

The term “10x content” was coined by Rand Fishkin , the co-founder of Moz in May 2015. Since then, it has become a popular phrase in the internet marketing world.

The act of creating 10x content is simply creating a content that is 10 times better than anything on the search result for a particular keyword.

When you create a 10x content, it will keep getting you traffic and customers for many months and years to come.

For example, Neil Patel runs an internet marketing agency at QuickSprout.

He created a 10x content targeting the keyword “online marketing.”

This is a keyword that receives 8,100 average monthly searches and worth $23.17 according to Google Keyword Planner .

QuickSprout’s 10x content currently ranks #1 for that keyword.

Only 10x contents like this have the power to rank on search engines for a very long time, sending thousands of continuous visitors and customers as a result.

11. Invest In Better Product Management And User Experience Design

There’s no way you will effectively market a product that is hard to use, difficult to understand and poorly designed.

Life’s too short to build something nobody wants. Nikkel Blaase

Always keep in mind that it’s not about what your product can do, or what your service does. It’s about how customers will use your product, use your service, and how it’s going to better their lives.

Marketing starts with product thinking , product management and user experience design . These three things could make or break your marketing.

Your customer acquisition cost will remain high and unbearable if your product is bad, or there’s a zero need for it.

Your product must be useful, better and valuable than what your competitors have. This is where marketing starts. This is what determines if your customer acquisition cost will remain high or go down.

Okay, let me give you an example:

Apple.

The iPhone only accounted for 15 percent of global smartphone shipments , but it claims a whopping 92% of the profits. Isn’t that interesting?

Apple success is down to its product thinking, product management and user experience design. But, product thinking (or product development) is the most important of them.

If there’s no need for your product, then it will fail even before you start marketing it.

Apple products are useful, better and valuable. They make people look smart and stylish.

12. Use Retargeting To Bring Back Visitors

It’s more expensive to target strangers than to bring back old visitors to your website.

Retargeting or remarketing is a highly effective marketing strategy that brings back people who had earlier expressed a strong interest in your product or service. It’s much easier to convert these people into customers.

Retargeting is a cookie-based technology that uses a simple Javascript code to anonymously ‘follow’ your audience all over the Web.

Here’s how it works :

  • You place a small, unobtrusive piece of code on your website (this code is sometimes referred to as a pixel)
  • The code, or pixel, is unnoticeable to your site visitors and won’t affect your site’s performance
  • Every time a new visitor comes to your site, the code drops an anonymous browser cookie

Later, when your cookied visitors browse the Web, the cookie will let your retargeting provider know when to serve ads, ensuring that your ads are served only to people who have previously visited your site.

Retargeting is so effective because it focuses your advertising spend on people who are already familiar with your brand and have recently demonstrated interest in it. That’s why most marketers who use it see a higher ROI than most other digital channels .

Retargeting helps people remember your brand, which then make them come back to your website.

For example, Larry Kim, the founder of WordStream wrote that retargeting boosted his site’s direct traffic .

Not only that.

Larry Kim also saw a 51% increase in conversion.

Retargeting is a great way to maximize your ROI per visitor.

Retargeting is even more effective when you combine it with SEO and content marketing.

13. Improve Your Website’s Conversion Rates

You’ll be losing a lot of sales if your site isn’t perfectly optimized for conversions.

The layout and how attractive your site looks is very important. Don’t expect a poorly-designed website to turn a lot of prospects into customers.

It’s not about the design of your website alone. The contents you have on your page could hurt or help conversions too.

For example, Fitness World, a major chain of gyms in Scandinavia saw an increased of 213.16% in conversions by making their copy more relevant.

They simply changed the call-to-action (CTA) of their PPC landing page from “Get Membership” to “Find Your Gym & Get Membership.”

Unbounce was able to increase their click-through rate (CTR) on a landing page just by changing one word in the button copy.

They changed the possessive determiner “You” to “My” and it increased the click through rate to a payment page by 90%.

14. Invest In Customer Service

A good customer service experience would drive new and repeat business.

On the other hand, a bad customer service experience would drive customers away.

Most of these sad customers would tell their friends and family about the bad service they received from your business.

This infographic from ZenDesk explains it all:

I currently host this site with SiteGround. And I enjoy the amazing customer service experience they give me whenever I have problems.

15. Invest In User Onboarding

The first experience your customers have with your product or service is very important.

If your product is too hard to use or too complicated to understand, then don’t expect many customers to stay long with your business.

If your product is hard to use, it kills growth and your customer acquisition cost would be high.

Before I proceed, I’ll like to explain what User Onboarding means:

User Onboarding is the process of increasing the likelihood that new users become successful when adopting your product.

You can learn some user onboarding lessons from popular web apps.

You may not be selling a web app, but it’s important that your customers get the full idea of your product or service the first time they use it.

The better you can help customers understand and use your product, the lesser your cost of acquiring new customers would be.

Campaign Monitor was able to increase their new customer acquisition by 22% just by sending a series of onboarding emails.

The reason why Slack has been so successful is because of the stickiness of their product.

And it all starts with user onboarding. They walk you through their sign-up process with a lot of ease.

You should do the same thing with your product.

The easier the first-time experience is, the more customers will return to your product or service. That boosts your business’ word-of-mouth reach which in turn improves your customer acquisition cost.

16. Become A Thought Leader Through Online Content Marketing

Thought leaders tend to be the most successful professionals in their fields. They are influential. When they speak, people listen. People stay glued to every word they say.

People like Neil Patel, Joe Pulizzi and Jay Bear built up successful businesses because they became thought leaders through online content marketing.

When you’re a thought leader, every business you start turns gold.

Thought leaders names are mentioned everywhere online. One thing you will often notice is that the names of their companies go along with their names.

Okay, here’s is the Medium profile of Jay Bear :

Note how the name of his company was mentioned in his Medium profile. His name goes along with “the Founder of Convince & Convert.”

This is helping his marketing company, Convince & Convert receives loads of customers. His name is tied to his company.

He might be building his personal brand through the contents he publishes online, but he is building his company too.

The same is true for many business owners who regularly publish contents online. Their names appear alongside their companies. Good for their companies of course.

A marketing strategy such as this brings down your customer acquisition cost to almost zero. You’ll enjoy a lot of free press and promotion without even asking for it.

17. A/B Test Everything

Internet marketing isn’t a guessing game. You have to test everything. I mean every little thing.

Digital marketing is so weird that even a poor website design could increase your conversions, then your revenue.

In a blog post on WordStream , Brad Geddes, the founder of Certified Knowledge , a PPC toolset and training platform testified that a new version but terrible web design increased his client website’s profit by 76% .

A New Terrible Web Design Could Increase Profit

“I was working with a client who had a terrible landing page. It wasn’t well designed and you had to click on a button to go to a terrible form page to convert. I begged them to create a new page and, at least, put a clean form on the landing page. They came back with a page that still wasn’t pretty and had their terrible form just embedded on the page.

The new version increased the website’ s profit by 76%.

That’s when my perfectionist’s brain realized: You don’t have to be perfect. To achieve greater results, all you need to do is better than you currently are.” —Brad Geddes, founder of Certified Knowledge

A/B testing (or split testing) is simply testing different variations of anything on your site.

Test long copies versus short copies. Test small fonts versus big fonts. Test long headline versus short headline. Test your call-to-action buttons. Test video versus no video. Test pictures versus no pictures.

A small wording change could increase the click-throughs for your ads, landing pages and product pages.

Take a look at option A and B:

A. Get $10 off the first purchase. Book online now!

B. Get an additional $10 off. Book online now.

The click through rate (CTA) doubled with option…. B according to Brad Shorr , the Director of Content & Social Media for Straight North , an Internet marketing agency in Chicago.

When you continuously a/b test, your revenue will keep increasing . But when you don’t a/b test, your revenue will stay static and predictable.

A/B testing helps you convert more visitors into customers. This helps you reduce your customer acquisition cost.

18. Enhance The User Value Of Your Product

Customers are selfish just as many business owners.

Customers want the best product that offers them true value for their money.

Business owners want to bank most of the profits just like Apple is doing with its iPhone.

Who wins?

The customer wins of course.

Customers have the freedom to choose between you and your competitors. They are free to leave your competitors and patronize you, and vice versa.

What determines if customers will choose you over your competitors?

Here’s a better question:

What do you offer that your competitors don’t?

This simple question could help you enhance your product’s user value by over 500%. At this point, you may become unstoppable for your competitors.

You have to give customers something they won’t get from your competitors.

This is often called the Unique Selling Proposition (USP).

Buffer does it well with their blog. They use their blog to deliver unbeatable contents to their customers.

In fact, Buffer has 4 different blogs:

  1. Buffer Social : A blog where the Buffer team share thoughts on social media and online marketing.
  2. Buffer Open : A blog where the Buffer team share everything about their journey to greater productivity, more transparency and a happier work culture.
  3. Buffer Overflow : A blog about development, API’s and being an engineer at Buffer.
  4. Buffer Happiness: The Buffer team are yet to start blogging about Happiness. They said it’s coming soon.

Buffer’s USP is driving them massive traffic and customers to their business.

Your business USP could be different from Buffer.

Your USP could be:

  • Featuring fans in your content
  • Sending them something they didn’t expect
  • Helping customers do something they love
  • Being more convenient than your competitors
  • Making quality a priority

Whatever your USP is, make sure you’re doing something that makes your business unbeatable in your niche.

No doubt, enhancing your product value would lower your acquisition cost.

Customers wouldn’t compare you to your competitors because they can’t just match your unique value.

19. Invest In Customer Retention

According to the Harvard Business School , increasing customer retention rates by 5% increases profits by 25% to 95%.

According to the book Marketing Metrics , it says the probability of selling to an existing customer is 60 – 70% while the probability of selling to a new prospect is 5 – 20%.

Customer retention is an important part of growth. It will cost more to get new customers if your current customers are leaving your business at a very high rate.

According to the White House Office of Consumer Affairs, a dissatisfied customer will tell between 9 – 15 people about their experience. And around 13% of dissatisfied customers tell more than 20 people.

By keeping your current customers happy, you’ll effortlessly gain new customers as a result of the positive experience you provide. You’ll also spend less to acquire new customers.

Let’s say you have a SaaS product.

Each customer pays you $50 per month.

The average customer stays with you for 10 months. That means your average customer lifetime value (CLV) is $500.

($50 x 10 = $500).

Okay, let’s assume you have 1,000 customers.

Increasing the average month from 10 to 12 months — just 20% — would add $100,000 in revenue to your business .

The head of marketing at Groove, Len Markidan said that there are three pillars of customer retention .

They are:

  1. Keeping Customers
  2. Reducing Customer Effort
  3. Delivering Excellent Customer Service

Customers would stay longer with your business if you can do all these three.

20. Invest In Your Customers

Most business owners are stingy and selfish. They only care about how much they can milk from their customers.

Don’t become a part of these business owners.

You need to invest in customers in order to grow your business.

When you invest in your customers, they more are likely to recommend your business to their friends.

You don’t invest in customers by doing better advertising and promotion.

You don’t invest in customers by offering them discounts and coupons. That will only turn them into bargain-hunters.

So how can you invest in your customers?

You invest in your customers by helping them make better-informed decisions.

You invest in your customers through making your product easier to use and understand.

You invest in your customers by giving them tools that make their lives easier.

For example, Neil Patel runs an internet marketing agency through QuickSprout. Here’s how he invest in his customers :

Invest In Your Customers

“…I invested $30,000 to create my advanced guides, I still gave them away for free. And, trust me, I’ve made back my investment 20x since I published my advanced guides.” —Neil Patel

21. Optimize Your Site For A Wonderful Mobile Experience

Mobile is the present and the future.

64% of Americans now own a smartphone according to the Pew Research Center . This will only continue to increase.

Consumers expect to see the information they are looking for quickly and with ease.

In fact, 67% of web users are more likely to buy from a mobile-friendly site . So, if that site’s not yours, you’ll be missing out in a big way

Or, are you operating a local-based business?

Better!

It gets more interesting when you consider the fact that 78% of mobile searches for local business information result in a purchase .

So, if your site isn’t mobile-friendly, your customer acquisition cost would be high due to many mobile users being unhappy with the way your webpage look.

22. Answer Common Sales Objections On Your Website

Overcoming objections is an essential part of the sales process. Most marketers often ignore this fact.

Objectionsare anything that stops a customer from buying from you. Michael Akinlaby

Note: I said “from you.”

You might be interested in what stops someone from buying at all. But that’s wrong. You should only care about why someone doesn’t want to buy from you.

As soon as customers land on your website, there’s a battle going on in their minds.

They start questioning your price, credibility, knowledge, value and everything else.

Except you make people know why you’re the best for them, you’ll be losing a lot of potential sales which would increase your customer acquisition costs.

You have to address common objections that may stop a customer from buying from you, right there, on your website.

For example, HubSpot has a page dedicated to answering common sales objections.

On this page, you’ll see questions like:

  • What is the ROI of using HubSpot?
  • How is HubSpot different from WordPress?
  • Why is HubSpot the #1 Marketing Platform?
  • What is the ROI of using HubSpot?

Instead of HubSpot leaving customers to figure the answers to these questions by themselves, HubSpot made a smart move to answer them.

This page is helping HubSpot convert some visitors into sales reducing their cost of customer acquisition in the process.

23. Create Demo Videos That Answers Every Likely Sales Questions

Zoho is a web-based online office suite that does everything from sales and marketing, email and collaboration, help-desk, and HR.

Zoho has CRM demo videos that show you how to manage your leads, integrate email marketing, follow up sales activities and more.

Demo videos like these will instill confidence in customers as it allows them to take a sneak peek of your product.

Creating demo videos would increase your sign-ups which would help you lower your cost per customer.

24. Evaluate Your Inside Sales Versus Outside Sales

First, let me define what inside sales and outside sales mean.

According to Investopedia :

Inside sales are the sale of products or services by sales personnel who reach customers by phone or online, rather than traveling to meet them face-to-face.

Inside sales relies on phone, emails and the internet to reach customers.

Now, let’s talk about outside sales .

According to Business Insider :

Outside sales, as opposed to inside sales, typically refers to a sales job in which the sales rep is consistently meeting in person with their target buyers. This can include extensive presentations, attendance at trade shows, as well as a few nights a week in a Holiday Inn.

Insides sales people are not only less expensive in direct salary costs, but also in travel costs. It allows people to work from a location and contact more people.

Adopting the inside sales approach if you are currently using the outside sales approach could save your thousands of dollars in customer acquisition.

25. Use Social Login On Your Website

According to a research compiled by WebHostingBuzz , requiring users to enter email addresses, names and other data – and remember yet another set of usernames and passwords – puts them off…

You might be driving away potential users or customers by insisting on traditional registration alone.

Many web users now have what we call “ password fatigue .”

It’s almost impossible to remember the passwords for every site you signed up.

In fact, 92% of users will leave a site instead of resetting or recovering their login info.

The founder of Social Media Examiner, Michael Stelzner said that a significant 83% of people who signed up for his Networking Club membership used the social login to register .

When you visit Medium, the emerging site for people to share their unique stories, you’ll see that you’re presented with different social platforms as a way of signing up.

26. Regularly Publish Contents That Go Viral

When Facebook paid $19 billion for the mobile messaging app, WhatsApp, people were stunned by the high valuation.

What’s interesting about WhatsApp is that it reached 450 million users without investing a penny in marketing .

Now, you may say that WhatsApp is a viral product. Your product may not have the viral attributes of WhatsApp, but there’s a way out.

The good news is, you can make your product go viral by providing interesting and entertaining contents your target audience wants to read.

If you can create a piece of content that goes viral, and you tie it back to your business, people will remember your business.

Dollar Shave Club (DSC) grew from a viral video to a team of 45 full-time employees , and a $615 million brand .

Here’s the link to the amazing video that puts Dollar Shave Club on the map:

In the first 48 hours after the video debuted on YouTube, some 12,000 people signed up for the service. Aside from some Google ads, there has been no other marketing.

Your content doesn’t have to be a video to go viral. It could be a list post, an ebook, infographic, or a case study.

Consistently making your contents go viral will increase your word-of-mouth referrals. This slashes your customer acquisition cost.

27. Use Referral Marketing

Referral marketing is so powerful that it can make your business go viral within a short period of time.

We regularly get advice from friends on which TV shows to watch or which restaurants to go. It’s because we trust them. This trust factor is what makes referral marketing a highly-effective customer acquisition strategy.

Instead of doing all the work promoting your business, referral marketing makes your customers join you in marketing your product.

Airbnb currently uses this marketing tactic . It’s because it works and helps them reduce their customer acquisition cost.

28. Reduce Your Churn Rate

Churn rate is the rate at which customers are leaving your business.

Here’s the formula for calculating your business’s churn rate :

And here’s a perfect example showing this formula at work:

Regularly losing a huge number of customers increases your customer acquisition cost.

Unhappy customers can do a serious damage to your business through writing negative reviews on social media. New customers will find it difficult to trust you as a result of this.

Those negative reviews would increase your spending on acquiring new customers.

So, how can you improve your churn rate to reduce your customer acquisition cost?

Here are some effective ways to reduce your churn rates:

  1. Talk to your customers to know what they expect from your business, along with their problems and needs.
  2. Know your product or service weaknesses and make efforts to fix them immediately. MySpace lost to Facebook because it was too buggy, had a lot of banner ads and didn’t make any improvements.
  3. Offer something unique that your customers can’t get elsewhere. This should give you a competitive advantage. Companies like Rackspace, Zappos and Apple regularly deliver on their competitive advantage.
  4. You should know why customers stopped doing business with you. Don’t be afraid to ask them
  5. Avoid stupid decisions or actions that might get you bad press.
  6. Continue to assure your customers that your product is the best. Little assurances will make customers stay glued to your business.

29. Mix Up Paid Channels With Free Channels

There are a lot of paid marketing channels like paid search, display ads, social ads, video promotion and more.

On the other hand are free marketing channels. They are PR, SEO, blogging and guest blogging. These free channels are effective as much as the paid channels.

In a guest post on the Bench blog , Kristi Hines talked about building her freelance business from the ground up using inbound marketing.

She didn’t spend a dime on paid channels, yet she is getting six-figure clients come her way.

Multimillion dollar businesses like Moz, HubSpot and Help Scout heavily rely on free marketing channels.

Help Scout reported that their blog posts drew 2 million visitors in the year 2014 alone .

It’s interesting when you consider the fact that Buffer got its first 100,000 users through guest blogging alone .

Buffer is worth around $60 million today . They got their first 100,000 customers through guest blogging.

Free channels are as effective as paid channels. Free marketing tactics like blogging, guest blogging and SEO can generate thousands of high-quality clients and users.

Combining free channels with paid channels reduces your cost of customer acquisition.

30. Create And Test New Marketing Strategies

Maybe you’re currently using Facebook ads to drive customers to your business.

Facebook ads offer you a good return on your investment.

Should you try new marketing strategies?

Yes, you should.

Why?

Okay, I will explain.

We live in a world where things change too fast. Today’s big market leader may be nowhere to be found tomorrow.

We’ve seen that happen many times. MySpace, Yahoo, and Paypal. These once untouchable giants have lost most of their authority.

New ideas are changing the world. New ideas are replacing old ideas. The same thing applies to various customer acquisition strategies .

The marketing tactic that is so effective today will become obsolete in the future.

You have to be at the forefront. You need to drive these changes so that these changes don’t drive you.

Yes, you should focus on what works right now, but you should also be open to new ideas. Test those new ideas as soon as they present themselves to you.

For example, when infographic was still a new marketing tactic, KISSmetrics used it to grow their business and reduce their customer acquisition costs.

KISSmetrics Grew With Infographics

“Within the two-year period, from 2010 to 2012, 47 infographics generated 2,512,596 visitors and 41,142 backlinks from 3,741 unique domains. They also generated 41,359 tweets and 20,859 likes.

That means, on average, each infographic generated 53,459 visitors and 875 backlinks from 79 unique domains. When it comes to social shares, each one generated 879 tweets and 443 likes.

After 2012, infographics weren’t providing the same results as before. One of the main reasons for the poorer ROI was their rise in popularity. More and more companies started leveraging them, which made them more common.

The newer infographics, on average, drove 21,582 visitors and 371 backlinks from 34 unique domains. As for social shares, each one generated 486 tweets and 259 likes.

The reason for the drop in traffic and links isn’t related to the quality of the infographics. We used the same research methods to come up with topics and the same designer in many cases. And we promoted them through the same channels.

As you can see from the KISSmetrics data, infographics still drive traffic but not as much as they used to.” —Neil Patel, co-founder of KISSmetrics

So what new customer acquisition strategy can you try today?

Test it. And if it works, overuse it until all your competitors are using it. Then test a new tactic again.

31. Set Up An Affiliate Program In Order To Focus On Providing An Unbeatable Service To Customers

One of the benefits of setting up your own affiliate program is that it allows you to focus on just delivering a good customer experience.

Most of the marketing is taken care of by your affiliates. You only need to create a sales page that has been well optimized for conversions.

This may not apply to every kind of business. But if your business is a SaaS product or an information-based business, then you can heavily profit from this approach.

This marketing strategy helps you reduce your acquisition cost because your affiliates will only get a percentage of the sale. No loss.

Let’s assume the price of your product is $40 per unit and you pay affiliates 30% for every sale they make. That means an affiliate earns $12 per sale.

For example, AWeber is regarded as one of the most popular email marketing software on the web.

AWeber has an affiliate program that rewards people who send customers to them. They give you a custom affiliate link and you get a recurring 30% commission for every customer you refer.

32. Start And Join Conversations on Social Media

Social media is a great place to connect with customers in real-time.

Imagine you’re a clothing company and you find a tweet saying “I need to get rid of my clothes and start afresh.” This is a great opportunity to pitch your company and your mouth-watering offer the customer can’t resist.

A conversation like this allows you to jump in front of customers who are likely to buy your product and even recommend you to their friends on social sites.

Increasing your reach on social media reduces your customer acquisition cost. Soon, you won’t have to reach out to everyone who is need of your products. Your business would be so popular because your customers are talking about you.

33. Offer A Free Trial

Top internet marketing companies like Shopify, Moz and Squarespace all offer free trials for their products.

Back in 2013, Neil Patel tested each of the below for his product , The Traffic System which sells at $197:

  1. To sell the Traffic System for $197 with no free trial and no money back guarantee.
  2. To sell the Traffic System for $197 with a 30-day money back guarantee.
  3. To sell the Traffic System for $197 with a 7-day free trial and requirement of a credit card upfront.
  4. To sell the Traffic System for $197 with a 7-day free trial, requirement of a credit card upfront and offer of a 30-day money back guarantee.

Below are results of his tests:

  1. Original offer (no guarantee/no trial): $19,700 a month in revenue
  2. Money back guarantee offer: $20,976 a month in revenue
  3. Free trial with credit card upfront offer: $24,428 a month in revenue
  4. Free trial with credit card upfront combined with a money back guarantee offer: $24,428 a month in revenue

As you can see, the free trial version wins.

Combining free trial with a money back guarantee doesn’t make sense. There’s no money to refund because people haven’t paid you yet.

Offering a free trial for your product could increase your conversion rate, thereby decreasing your customer acquisition cost in the process.

34. Identify And Reward Brand Ambassadors

First, let’s define what the term “Brand Ambassadors” means:

Brand ambassadors are people (or fans) who are passionate about your brand or product and share their love for it on social media, blogs and forums.

Below is an image by a Nike fan showing her new pair of Nike shoes on Twitter. This is Nike’s ambassador:

Nike might want to reach out and reward people like this. That small act of kindness would only lead to more people talking about the Nike brand.

If you can gain the hearts of your fans, those fans will talk about you. They will even recommend your product to their family and friends. That leads to more exposure.

More exposure = More sales.

Identifying and rewarding brand ambassadors is a great way to reduce your customer acquisition cost.

For example, Microsoft has a Most Valuable Professional (MVP) awards program .

Microsoft’s MVP rewards people who constantly talk about any of the Microsoft products.

Given how technical many of Microsoft’s products are, there is a lot to be shared. So, Microsoft rewards anyone who writes about their products.

Benjamin Currier has won Microsoft’s MVP award 3 times for Excel and you can see the reason why:

Google has an Ambassador program for students who are enthusiastic about Google.

And even Lyft, the ride-sharing app is looking for brand ambassadors to grow its business.

Why are these businesses using brand ambassadors?

It’s because it helps them promote their products. It’s because it helps them grow while reducing their customer acquisition costs.

You don’t have to set up a brand ambassador program like Microsoft, Google and Lyft. But why not start giving little perks to anyone who mention your business on social media or blogs?

Doing this would spread the word about your business. Many more people will want to do business with you as a result of their friends talking about you in a positive way.

35. Fix Any Technical Issue On Your Website

A technical issue on your website could seriously hurt your conversion rate and affect your customer acquisition cost in the process.

Casey Henry published a study on Moz in 2011 to see if turning on CAPTCHA affects conversion rates.

The case study was done on over 50 different websites that Henry has either manage or have access to. These websites range from less than 1 year old to over 5 years old.

What he found was interesting:

The study shows that with form CAPTCHA turned off – a few spam mails get through, but no conversions are lost in the process.

Conversely, turning the CAPTCHA back on resulted in nearly 160 failed conversions.

Everyone hates spam, including me. But when it is affecting your conversion rates? Well, I’ll want to avoid it.

A technical glitch on your website could result in thousands of dollars in losses.

Amazon calculated that a page load slowdown of just one second could cost them $1.6 billion in sales each year.

Even Google has calculated that by slowing its search results by just four tenths of a second they could lose 8 million searches per day—meaning they’d serve up many millions fewer online adverts.

There are a lot of technical issues that could stop a prospect from converting into a customer on your website.

Your job is to find these loopholes and fix them before they start costing more money in acquiring customers.

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