Acquiring Customers Shouldn’t Break the Bank
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer, including all marketing and sales expenses. Reducing CAC while maintaining lead quality is one of the highest-leverage activities for any business. Lower CAC means higher margins, faster growth, and more sustainable operations.
How to Calculate CAC
Total Marketing and Sales Costs divided by Number of New Customers Acquired = CAC. If you spent $10,000 on marketing last month and acquired 50 new customers, your CAC is $200. Track this by channel to identify where you get the best return.
Strategies to Reduce CAC
Improve Your Conversion Rate
The fastest way to reduce CAC is converting more of your existing traffic. A/B test landing pages, simplify forms, strengthen CTAs, and optimize your sales process. Doubling your conversion rate cuts your CAC in half without spending a dollar more on ads.
Invest in SEO and Content
Organic traffic has zero marginal cost per visitor once content is created. While SEO requires upfront investment, the long-term CAC from organic channels is typically far lower than paid channels.
Build a Referral Program
Referred customers typically have the lowest CAC of any channel. They also tend to have higher lifetime value and better retention. Make referrals easy and rewarding for existing customers.
Retarget Warm Audiences
Retargeting website visitors and email subscribers costs far less per conversion than reaching cold audiences. These people already know your brand — they just need another touchpoint.
Improve Targeting
Wasted ad spend on unqualified audiences inflates CAC. Refine your targeting based on data: which demographics, interests, and behaviors correlate with actual conversions? Eliminate poor-performing segments.
Leverage Email Marketing
Email marketing typically has the lowest CAC of any digital channel because you’re reaching people who’ve already opted in. Nurture leads with automated sequences that guide them toward purchase.
The CAC:LTV Ratio
CAC alone doesn’t tell the full story. Compare it to Customer Lifetime Value (LTV). A healthy CAC:LTV ratio is typically 1:3 or better — meaning each customer generates at least 3x what you spent to acquire them.
Optimize Your Customer Acquisition
Brandastic helps businesses reduce CAC while scaling customer acquisition. Get a free marketing consultation.
