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B2B leads: 4 ways to reduce your customer acquisition cost

There's no doubt generating high-quality B2B leads can be expensive. That’s why customer acquisition cost (CAC) is one of the best metrics to determine the effectiveness of your marketing.

CAC is a vital metric to measure as it indicates whether you are spending too much to acquire new customers compared to your customer lifetime value (CLV). 

In this post, we explore what CAC is and how you can measure it. We also discuss tips for reducing your CAC to optimize your sales and marketing spending and keep your profits up.


What is customer acquisition cost?

Your customer acquisition cost is the total cost of acquiring new customers. It includes marketing, sales, and your employee costs. The key to profit and success is ensuring that your CAC is lower than your CLV, measured by your average purchase value multiplied by your purchase frequency.

CLV = (average purchase) x (purchase frequency)

To calculate your CAC, divide the total cost of your marketing and sales efforts by the number of customers acquired.

CAC = (marketing and sales cost) / (number of customers acquired)

If your ratio is around 1:1, you probably spend too much on sales and marketing, or your pricing could be too low. Ideally, your CLV:CAC ratio should be in the region of 3:1. Anywhere north of that, and you are likely missing out on business.


4 ways to reduce your customer acquisition cost

Over the long term, a high CAC can strain your finances, so it is important to find ways to lower it. If your customer acquisition cost is high, here are some ways to reduce it:


1. Improve your data

Better quality target account data will make it easier to identify and reach potential customers more likely to be interested in your product or service. Accurate, up-to-date contact and buyer intent data allows you to customize your marketing messages to appeal to specific needs and pain points. In addition, having a higher quantity of high-quality data enables you to be more selective in who you ultimately decide to do business with, which can help further reduce customer acquisition costs.


2. Improve internal data analysis

By understanding your target market better and knowing which channels are most effective for reaching them, you can allocate your resources more efficiently and ultimately save money. In addition, if you have a clear picture of the needs and preferences of your customers, you can tailor your marketing messages to appeal to them more effectively, resulting in higher conversion rates. Once you have identified your market niche, why not try segmentation augmentation? Provided by a data provider like Qualifi, segmentation augmentation will help you grow your audience by identifying similar accounts for targeting.


3. Account-based marketing

Account-based marketing (ABM) is a targeted approach to marketing in which an organization identifies and pursues key accounts. ABM can generate high returns on investment (ROI) by identifying and targeting key accounts that are likely to generate revenue, using sales and marketing resources more efficiently. ABM's impact can be enhanced using buyer intent data to ensure you reach the right people at the right time with the right message - further increasing the likelihood of conversion and reducing CAC.


4. Optimize sales conversion rate

Optimising your sales conversion rate is a very effective way to reduce customer acquisition costs. There are many ways to do this, but some of the most common and effective methods include:

  • Ensure you are targeting the right audience
  • Use lead scoring to determine lead quality
  • Simplify or improve your product or service offer
  • Offer a guarantee

Following these tips, you can lower your customer acquisition cost, achieve a desirable CLV:CAC ratio, and improve your bottom line.


How we can help

If you are looking to reduce your customer acquisition cost, get in touch. Due to the quality of our unique first-party data, we can help you reduce wasted spend and focus marketing campaigns on those you know are interested in your products. Our Precision platform also includes a lead generation program that has been proven to provide clients with a steady pipeline of high-quality leads.