You just can’t put a price on some things. Grandma’s pancakes: to die for. Running into Bill Nye at a cafe and learning about the chemical reactions of roasting coffee beans: a treasured memory and newfound knowledge. The new shirt you bought after you spilled coffee all over yourself because you were so flustered by your Bill Nye encounter: $25. Totally worth it. Science rules, y’all!
While you pay a price to maintain and improve your business, it’s easy to forget that you pay for your customers as well. Your Customer Acquisition Cost (CAC) is simply how much money it costs to gain a customer. Of course, the goal is to do more than break even on this cost. Follow along with Ahrefs as they cover how to use and reduce Customer Acquisition Cost.
How to use CAC
- Use CAC in relation to LTV (Customer Lifetime Value). If you’re paying more to gain a customer than your customer pays you, then you’ll have a bit of trouble sustaining your business. Ideally, you’ll want your LTV to be at least three times greater than your CAC to keep a profit. Of course, there are other costs to account for.
- Use CAC in isolation for performance ad channels. CAC is difficult to measure across all channels. Google likes to attribute conversions to ads that directly drive those conversions, so use CAC for those kinds of performance channels.
How to reduce your CAC
- With SEO and content marketing. We’re preaching to the choir here, but mixing paid efforts with organic efforts will yield better results, and it can help reduce your CAC. An effective SEO strategy will cover all the marketing funnel stages, while PPC is best used for someone ready to buy. If you’re with someone throughout their journey, they won’t need as big a push from PPC to cross the finish line.
Learn more CAC reduction tips as well as some of the problems with CAC.
