Customer acquisition cost (CAC) is a crucial business metric determining how effective your current marketing strategy is. It is primarily a long-term indicator of how much money you will make in the future.
Simply put, it is the cost you incur to acquire a customer over a specified period. So, in an ideal scenario, a lower CAC means better ROI and more customers on board.
Even though there is no definitive way to determine which CAC is good or bad; every industry has several factors that showcase a customer’s lifetime value for your brand.
Now, in an ideal world, you would love to have a $50 CAC to get a client that can generate a value of $50,000 over their association with your brand.
But is it really possible? You will have to spend much more to get business worth $50,000 or more from a single client.
Optimizing Your CAC
Every successful business understands the importance of adapting to changing market trends. They come up with new and innovative tactics to market the brand.
Referral marketing is one of the top techniques being followed by leading brands. It engages more customers and opens doors for new clients alongside.
What makes referral marketing such a popular option? It is working and with good reason. Here are the key points that make it a leading choice for marketers today:
- Low cost
- Higher social media visibility
- Improved revenue
But is it really possible to put in a manual process for customer acquisition through referrals?
Probably not. But this pain point can be addressed easily using automated and customized referral programs for your customer advocates.
Now, we will take a look at how you improve your CAC by implementing robust referral marketing software.
How do referrals work?
But first, let’s have a quick recap about what a referral marketing software is all about.
It is a tool that companies use to promote their products or services by leveraging their customer base and using their references to generate more sales leads.
What does referral marketing software do for your business?
A referral solution helps you generate reports that give you a clear perspective of the ongoing customer referrals while combining your sales data in the mix.
By having the data at your fingertips, you will determine which customer referred more people. It also reflects the revenue generated during that transaction.
It further helps you identify your top loyal customers and allows you to create tailor-made referral programs to them in the future.
Think of it this way, your customer’s connection might already be interested in your product, and once they learn about it from a trusted source, they will not hesitate to close the deal immediately.
In such a case, the CAC is next to zero, and such word-of-mouth incidents decrease the CAC over time.
Sounds too good to be true? It is. Therefore, we need to find ways to motivate the customers to participate in the referral programs and make repeated efforts to bring down your CAC.
How does a referral marketing solution reduce customer acquisition cost?
A well-developed referral solution integrates seamlessly with a POS software, CRM tool, and ESP solution.
It allows you to connect to your API with ease, generate more referral opportunities while gamifying referral programs, and get actionable insights from different platforms.
In addition to that, you will be able to create advanced triggers during different communication points with your customers to make their brand association a memorable one.
2. Customer Engagement:
You can reinvent traditional engagement methods using concrete data without investing additional dollars.
You will be able to motivate your customers to buy more products and refer more friends to your brand.
When a customer is engaged completely, you can identify their preferences and set up more opportunities from a centralized dashboard.
Bring your customers into a game-like environment where every effort they make leads to new experiences and rewards like badges, level up in leaderboards, etc.
Keep referrals as a part of this program to generate organic leads and drive customer acquisition at a pace like you have never done before.
4. Advanced Analytics:
With detailed analytics reports, identify the activities that work and rewards that motivate them to come back.
By eliminating the guesswork, you can mitigate the investment needed to develop new strategies regularly, thus reducing the CAC significantly.
You can pinpoint the critical intervention points, record best responses, and easily modify the programs that work to drive optimum results.
Partnerships created through referral marketing create a strong networking effect for your brand and increase the number of regular interactions with new potential customers.
Over time, you spend on digital marketing, social media promotion, and influencer marketing to decrease, and it positively impacts your ROI.
Organizations that use referral marketing software can utilize their existing customer base and transform the association into a robust customer acquisition strategy.
In the end, every effort counts and resources put into retaining customers to engage them in referral programs are a low-cost, high return strategy that will yield compounding results in the future.
Kickstart a customized referral program for your brand today with NextBee. Get in touch with us for a free consultation and take the first step towards improving your bottom line.