Do you know how to workout your current customer acquisition cost? Working it out is simple and anyone can do it. All you have to do is to divide the amount that you currently spend on marketing your business to potential new customers, with the amount of new customers that your business attracts in any given time period. So you can easily workout what your customer acquisition cost is for the past month, the past financial quarter and the past financial year. If you’ve already successfully worked out your business’ customer acquisition cost for a set period of time and are shocked or are disappointed by how high your current customer acquisition cost is, there could be numerous reasons why it’s too high.
To work out why your customer acquisition cost may be higher than you’d like, which will help you quickly take action to decrease your average customer acquisition cost, simply continue reading. As you’ll discover a few key reasons why your customer acquisition cost may be far too high.
3 Key reasons why your customer acquisition cost may be too high:
Your marketing campaigns may be targeting the wrong demographic:
There’s no point coming up with brilliant or expensive marketing campaigns that fail to correctly target your business’ target audience. Even if 100,000 individuals come across a new advertisement such as a Facebook advertisement, if the bulk of the individuals who see your advertisement aren’t interested in the types of products and services which your business produces, you’re unlikely to acquire many new customers. However, if your online marketing campaigns target individuals who you are certain are in your business’ target audience, even if your advertisements only reach 50,000 individuals, you’ll be far more likely to attract far more new customers.
You have failed to conduct valuable market research:
Worse yet, you may not have defined who your business’ target audience is and may be creating generic marketing campaigns that are unlikely to pique anyone’s interest. The best way to find out who the individuals in your business’ target audience are is to pay for valuable market research. As you may find out that the individuals who are most interested in your business’ products and services are slightly different than you may have pictured. For an example, you may have thought that your business’ target audience were teenage girls but your target audience may actually be young women in their twenties and thirties.
Your marketing campaigns may not be effective:
Another reason why your customer acquisition costs may be high is that your marketing campaigns may be ineffective. If you currently pay for a third party such as a digital marketing firm in order to design and create your marketing campaigns for your small business, you may want to reassess which marketing firm you use to create your business’ marketing campaigns for you.
So if you were unhappy with your business’ customer acquisition cost and want to work on quickly decreasing it, it’s a great idea to learn from the information above.