Spend Less to Win More Customers
Customer Acquisition Cost (CAC) is the total cost of marketing and sales divided by the number of new customers acquired. Reducing CAC while maintaining quality is one of the highest-leverage activities for any business. Here’s how.
Improve Conversion Rates
The fastest way to reduce CAC is to convert more of the traffic you’re already paying for. A 1% improvement in conversion rate can reduce CAC by 20-30% without spending an additional dollar on traffic. Invest in landing page optimization, A/B testing, and streamlined conversion funnels.
Invest in Organic Channels
SEO and content marketing have high upfront costs but declining marginal costs over time. A blog post that ranks well drives free traffic for years. As organic traffic grows, your blended CAC drops significantly because you’re acquiring customers without incremental ad spend.
Optimize Paid Campaigns
Review your ad campaigns for wasted spend. Negative keywords in Google Ads, audience exclusions in social ads, and dayparting (showing ads only during high-converting times) can cut waste by 20-40%.
Leverage Referrals
Referred customers typically cost 60-80% less to acquire than paid customers and have higher lifetime values. Build a systematic referral program that incentivizes your best customers to bring others.
Retarget Warm Audiences
Retargeting past website visitors costs a fraction of reaching new audiences and converts at 3-5x higher rates. Set up retargeting across Google, Facebook, and Instagram to capture visitors who didn’t convert on their first visit.
