Reduce your Customer Acquisition Cost by Letting Competitors Pick Up the Bill
If you are reading this blog, the chances are that you already understand the logic behind customer acquisition costs, or CAC. If you are not familiar with this term, there are servers full of articles on the subject that Google can find for you, but don’t worry, it’s a relatively straightforward concept. Basically, I am using it in this blog to describe the cost associated in convincing a customer to buy a product or service.
Customer acquisition cost is incurred by the organisation to convince a potential customer to buy. This cost is inclusive of the product as well as the cost involved in research, marketing, and delivery/distribution costs.
If marketing and sales can efficiently persuade more customers to buy more products at premium prices then the CAC has reduced and the profitability has increased.
Most of the people reading this post will work in marketing and will be in competitive sectors. In some cases, readers will be working for companies who are dwarfed by competition with much bigger brands and budgets, against whom you are fighting to win market share. Many of 360 Insights’ clients are in this position, or at least started out that way.
This is where the power of rewards can be most potent. As our research and report show, potential customers can switch brand and purchase decisions at the last minute for the right reward or incentive. This means that your competitor can spend its budget on brand awareness and demand generation, getting the customer into the shop, only for you to steal the business at the very last minute because you are offering the right reward and incentive.
It also means, of course, that you could be the one spending all of your budget generating sales, only for another brand who is offering an incentive to steal your deal. That means that a customer doesn’t take your product to the checkout even though you have paid for them to get into the shop.
Rewards and incentives may not be as high profile as a big advertising campaign, but consumers have told us that they are often more influential when it comes to that final purchase decision.