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How to Lower Customer Acquisition Costs

For your business to thrive, it’s not enough to just have a few repeat customers coming back. You need a consistent flow of new customers coming in. It’s a matter of simple math – the more new customers you attract, the more profits you can make. 

The problem is that new acquisitions come with a hefty price tag. 

Depending on your industry, you could be spending hundreds upon hundreds of dollars on acquiring a single new customer –and that investment doesn’t always yield sufficient returns. You’ll quickly put your business in financial trouble if you spend more on your new customers than they spend on your products and services. 

To ensure success, you need a lower customer acquisition cost, which can often be easier said than done. 

Take a look below to learn how to decrease customer acquisition costs and keep your business thriving. 

What Is Customer Acquisition Cost (CAC)? 

First things first – what is customer acquisition cost (CAC)? In a nutshell, it is the total amount you have to spend to convert a single lead into a paying customer. 

It’s not just the money you’ve spent on an ad, for instance, that has successfully converted a customer. It’s the amount you spend on the entire customer journey, from start to finish. 

Calculating your CAC can help you identify the strengths and weaknesses of your customer journey, preventing you from wasting money on tactics and strategies that don’t yield positive results. Moreover, it helps you avoid unsustainable growth that can eventually lead to bankruptcy. 

Of course, to get an accurate CAC, you can’t just use a rough estimate of your expenses. You need to use an acquisition cost formula. 

Customer Acquisition Cost Formula 

The customer acquisition cost formula is simple. You just have to divide the cumulative costs of sales and marketing by the number of newly acquired customers. It looks like this: 

Customer Acquisition Cost = Sales and marketing costsNumber of new customers  

However, despite the formula being straightforward, it’s easy to make a mistake and overlook essential expenses when calculating your sales and marketing costs. 

To ensure the utmost accuracy of your CAC, you’ll need to identify every minute expense you have. That includes your total ad spend, technical expenses, inventory management expenses, employee salaries, production and publishing costs, and even creative costs associated with creating content for your blog and website. 

Only when you have complete insight into your expenses can you calculate your CAC and identify ways to reduce customer acquisition costs. 

10 Strategies to Lower Customer Acquisition Costs 

Strategies to Lower Customer Acquisition Costs 

Lowering customer acquisition costs means lowering virtually all your sales and marketing expenses. It’s not enough to just adopt a single cost-reduction strategy. You’ll need to streamline all processes and identify every saving opportunity without harming the customer experience. 

Below, you’ll find the top strategies to lower customer acquisition costs while ensuring the utmost customer satisfaction. 

Optimize Your Website 

The simplest way to reduce your CAC is by optimizing your website. 

Whether you’re running a small mom-and-pop store or an ecommerce business, your website is a powerful tool that can make or break your conversions. If your site is outdated and confusing, even those who’ve been searching for just a business like yours will abandon it and go to your competitors. On the other hand, if your site’s well-optimized and intuitive, it can persuade even your most hesitant leads to give you a chance. 

On average, website conversion rates stand around 2.35%. However, by optimizing your site, you can easily increase this number. 

Some of the main things you’ll want to do to improve your website optimization include the following: 

  • Ensure the website is user-friendly and easy to navigate;
  • Implement clear calls-to-action (CTAs);
  • Use landing pages for targeted campaigns. 

A user-friendly website that’s easy to navigate will keep your visitors on your site longer. Subsequently, it will give you more time to convince them to make a purchase and thus boost your conversions. 

Clear CTAs will help you guide leads through your sales funnel without friction, while dedicated landing pages will keep them focused on the specific product or service you’re trying to sell. 

Prioritize Your Leads 

Although it’s much easier to have a uniform approach to every lead, you’ll find that personalizing marketing content and prioritizing your leads yields much better results. 

For instance, a prospective customer who already follows you on social media and is well aware of your offers will find little value in marketing content designed to spread brand awareness. On the other hand, a member of your target audience who hasn’t yet gotten a chance to familiarize themself with your brand might find your content designed for those already subscribed to your newsletters confusing. 

In either case, you’d be wasting resources creating marketing content that doesn’t improve your conversions. 

Instead, you’ll want to prioritize your leads and create content designed for different stages of your sales funnel. You’ll want to create offers that seem personalized and relevant, and that will encourage different types of leads to continue interacting with your brand. 

Focus on Retargeting Your Users 

It’s easy to assume that all the resources wasted on leads who haven’t converted are just that – wasted. However, that doesn’t mean abandoning those presumably lost leads is always in your best interest. 

Retargeting prospective customers is a unique approach wherein you try to stay on the radar of your target audiences who’ve already interacted with your brand. That could be customers who haven’t returned to your brand in a while or those who’ve abandoned their shopping cart in the past. It can even be leads that used to be engaged with your brand on social media but are not any longer. 

When retargeting, you would highlight your brand’s strengths and remind prospective customers of what value you can offer. 

On average, retargeting can increase your conversions by as much as 150%, increasing your customer lifetime value and inadvertently reducing your CAC. 

Test and Experiment 

To lower your customer acquisition costs even further, you must devote yourself to testing and experimenting with your marketing strategies. 

Simple A/B testing, for instance, can help you better understand what your target customers are after and what marketing strategies work best. 

In general, you’ll want to slowly roll out any changes you want to make based on testing information. Drastically changing your strategies out of the blue could confuse existing and prospective customers, leading to poorer conversions. 

You’ll want to monitor how your campaigns progress, identify problem areas, and assess their overall performance to ensure better success rates with your future strategies. 

Improve Customer Retention 

Customer acquisition and retention are commonly seen as two very different concepts. However, they are more intertwined than you may think, and if you want to lower your CAC, you’ll need to improve your customer retention. 

The reasoning behind this is simple – retaining customers will automatically increase your customer lifetime value, thus bringing your acquisition costs down. 

Some tactics you could adopt to improve your retention rates include: 

  • Offering incentives to encourage repeat purchases; 
  • Providing exceptional customer service; 
  • Monitoring customer satisfaction and addressing any issues promptly. 

All of these tactics serve to improve the overall customer experience. And when your brand is known for its exceptional customer care, it’s much easier to attract new leads and boost conversions. 

Create Engaging Content 

If you want to attract leads, reduce your acquisition costs, and boost conversions, you need to publish regular, relevant content. High-quality content allows you to highlight your business’s strengths, establish authority within your niche, build a relationship with your audience, and inspire trust among your leads. 

With plenty of valuable content designed for each stage of your sales funnel, you’ll find it easier to retain your website visitors’ attention and encourage them to convert. 

Therefore, it’s in your best interest to start devising your blog strategy and creating informative content.

Leverage Marketing Automation 

Marketing automation is the best way to lower customer acquisition costs. This should come as no surprise – automation eliminates the need for additional staff members working on your marketing campaigns, thus reducing your expenses. It also eliminates the risk of human errors, expedites processes, and helps you stay on top of your leads and customers. 

You can take marketing automation a step further by investing in AI solutions

With the help of AI, you can automate conversations on social media, for instance, further optimize your marketing content, improve your targeting tactics, and more. 

Perform Conversion Rate Optimization 

Conversion rate optimization (CRO) is a critical process that will help lower your customer acquisition costs. It involves making changes to your site or app that help you increase your conversion rates and ultimately boost profits. 

However, the initial goal of your CRO doesn’t immediately have to be making sales. It can be any action your leads can perform to get started down your sales funnel. That can include following you on social media, giving you their contact information, signing up for your newsletter, or even simply adding a product to the cart without actually going through with the purchase. It can include any action that will take them one step closer to converting to a buying customer. 

Now, there are countless different tactics you could adopt to optimize your conversions. Some of them we’ve already discussed, such as creating dedicated landing pages and using clear CTAs. Other tactics you should try include: 

  • Displaying testimonials and reviews for social proof; 
  • Creating a sense of urgency by having time-limited sales and promos; 
  • Shortening your lead generation forms to make it easier for your leads to complete them. 

These are just some simple examples, and you can try plenty of other creative approaches. 

Improve Your Sales Funnel 

The next step toward reducing your CAC is improving your sales funnel. That means streamlining every single process and eliminating any obstacle that would discourage your leads from making a purchase. 

You must focus on creating a conversion path that’s clean, smooth, and, perhaps most importantly, gentle. You don’t want to try and force a sale of your most expensive product or most advanced service when a lead isn’t even aware of your brand and what it does, for example. Nor do you want to leave your leads confused and overwhelmed by bombarding them with different product categories, your video content, eBooks, forms, and more when they click on an ad for a specific product. 

You’ll want to guide them through your funnel smoothly without any friction. Start by slowly building awareness, interest, and desire, and then lead your prospects to action. 

Ensure that, throughout the entirety of the sales funnel, there isn’t a single distraction, such as slow-loading pages, inactive customer support, lack of product information, and the like. 

Implement Referral Program 

Finally, if you want to bring your customer acquisition costs all the way down, you must implement a valuable referral program. 

Over 85% of millennials, for instance, trust in referral marketing. Many wouldn’t even consider a brand, product, or service if their friends and family members didn’t like them. The trend is largely the same among younger and older generations alike, making referral marketing a powerful tool that can boost your conversions and bring your customer acquisition costs down. 

For a good referral program, you’ll need valuable incentives that will encourage your existing users to participate. You can use rewards such as gift cards, free products/services, discount codes, early access to new offers, and more. 


If you want to lower customer acquisition costs, you need to invest time and effort into it. It’s not just a one-time task but an ongoing process that requires your constant attention. You must carefully examine the entirety of your sales funnel, identify gaps, fix any potential issues, and completely streamline the customer experience. 

You’ll also benefit from performing a thorough digital marketing audit to identify weaknesses, find growth opportunities, and increase your ROI. You can read our previous blog to learn more about how a digital marketing audit can help you. 

Decreasing your customer acquisition costs isn’t easy. However, it’s essential to ensure that your business not only survives but thrives. Rely on OneIMS Solutions to bring your CAC down and ensure sustainable business growth. 

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Written By Samuel Thimothy

As the Chief Growth Officer, I provide leadership, direction and resource stewardship to the organization’s sales and marketing function. I also collaborate with our digital marketing strategy team in developing and executing growth marketing campaigns for our loyal clients.

Solomon Thimothy - OneIMS CEO

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