Customer acquisition cost, often abbreviated to CAC, is an important metric all SaaS companies need to optimize. Being in charge of, or owning, a SaaS company makes you all-too-aware of how important it is to develop a strategy to effectively reduce your CAC.
There are two basic ways for you to make your SaaS business more profitable:
1. Increase your LTV – customer lifetime value
2. Reduce your CAC
Here you can learn some of the ways you can effectively reduce your CAC costs. For example, while using Binadox SaaS Cost Management services is one of the simplest options, there are other methods that can be used, too.
Reduce the Reliance on Any Type of Paid Advertising
The returns you earn on paid advertising are linear. After you have worked to optimize your overall sales funnel, it makes it challenging to make bigger reductions in your total CAC if the entire marketing strategy you have created is reliant on the use of paid ads, such as pay per click. If this is the case, you are going to reach a certain level, and then find it challenging to move this metric any more.
If you want to acquire more customers by using paid advertising after you have properly optimized your campaign, then you are going to have to invest more money. While it’s predictable, it’s hard to achieve any exponential growth using this method.
A better and more effective way to reduce CAC over time is by investing in earned and owned media. Earned media is media that isn’t created by your organization, but instead, earned. Owned media is the assets that you actually own.
The main benefit offered by earned and owned media is that they will snowball as time passes. With their efforts, you are going to begin to build a following, ensuring that each of your efforts generates more results – all with the same investment.
Identify and Target Your Specific Prospects
Your ideal prospect has a buyer persona. Put simply, the buyer persona is a profile of what your perfect customer actually looks like. In some cases, you are going to have more than one.
If you don’t yet have or know your buyer persona, now is the time to figure things out. Once developed you have to target your marketing efforts to those particular individuals. As you create new strategies, you can determine if the effort is going to help and attract or to convert one of the buyer personas you have developed. If no, then you should pass and move on to another strategy.
There are more than a few SaaS companies that wind up wasting millions of dollars trying to attract the wrong type of people to their website. They do this by creating content that winds up addressing the wrong issues or choosing the wrong keywords for a pay-per-click campaign. There’s no question that this type of “wrong” information can occur on virtually any platform that you use.
Ensuring Your SaaS Company Makes Money
When it comes to reducing acquisition costs for your SaaS business, there are more than a few efforts and strategies that you can employ. Be sure to use the tips and information here to ensure that you are going to get the results that you want and need. By being informed, you can achieve the best results for your SaaS company and ensure that you make the most money possible with the efforts you invest in.