MBA1879 4 Ways to Improve Your Cost To Acquire a Customer

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Hey, welcome to the $100 MBA Show. Business strategies you can use right now. Delivered every single day with our daily 10 minute business lessons for the real world. I'm your host, your coach, your teacher Omar Zenholm. I'm also the co founder of Webinar Ninja, an independent software company I started with my co founder back in 2014. And in today's episode you will learn four ways to improve your cost to acquire a customer Your cost to acquire a customer is often referred to as cac. This is how much it costs you to acquire a customer to get a customer a paying one. Whether this is marketing costs, Facebook ads, Google Ads, a sales team, whatever it takes to attract and convert a customer is your cac. The problem is is that for many businesses, as they grow and as the markets mature, their cost per acquisition grows goes up. Recently this has really been a problem for many people on Facebook and Facebook ads. With the updates of iOS 15, it's been really hard tracking your conversions and therefore knowing how much you're exactly paying for a customer acquisition. So in today's episode I'm going to simplify things. I'm going to show you four ways you can lower the cost to acquire customer to get more bang for your buck. Some of these are very practical and some of them will require a bit of your creativity, but they're all things that you can start implementing right away. So let's get into it. Let's get down to business.

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Let'S get into it I want to make this super simple and therefore this episode won't be too long. So let's jump into the first way to lower your cost per acquisition. And this is proven to be the fastest way to lower cac. And that's to all offer tremendous value to acquire a valuable lead. Do you ever wonder why, let's say a company like Taco Bell offers free tacos to fans at ball games if the home team wins the game? Well, this is an example of Taco Bell giving extreme value. They're not giving a coupon. They're not giving you a buy one, get one free. They're actually giving you free tacos. They're giving you extreme value. Why? To get you in the door. This is their form of acquiring a customer. If you visit a Taco Bell, because chances are you're not only going to just have that one free taco, you're either going to buy more stuff while you're there or you'll come back to Taco Bell at a later date to enjoy another Taco Bell meal. So offering extreme value is one of those things that just compel people to check you out. This is why freemium has become so popular in the software world. You go back 10 years, most software companies were giving out free demos or free guides or white papers. Now most software companies are offering free trials, even free plans, why they're going extreme value. What can I give them that's so valuable that they're going to give me their name and email? They're going to go into my funnel. This also translates really well when you're advertising. So if you run a Facebook ad or you run a Google Ad or whatever, an offer your product for free, the chances of people clicking on it and going and converting are much higher than you not offering anything at all. Just saying, hey, check us out. This automatically drastically lowers your cost per acquisition and you could do a whole rabbit hole of Google search on this topic on giving extreme value and freemium and why companies do this to lower their cac. So that's strategy number one. Strategy number two, lengthen the time that you nurture your customer and ask for the sale. Many people want to convert a customer right away, but one of the ways to lower your cost per acquisition is to get them to join Your email list for something totally different, something that's valuable in line with your product or service, but with the sole purpose of, hey, I just need them to get on my email list because I'm going to spend six months nurturing this customer, giving them so much value, making them feel valued, and then I'm going to ask for a sale and it's going to be so much easier for me to convert because getting somebody on my email list is much cheaper than me trying to convert somebody off an ad to buy. Now, of course, the cost here is time. You're just lengthening the time where you nurture, but your upfront cost of getting that lead is going to be much, much lower. My third strategy is also a long, slow burn type of strategy, and that is being a part of the media. A lot of people leverage media like they try to buy banner ads on websites, they run paid ads on social media. They might get influencers to advertise their products and services and pay for that. They might do other things to, to get in front of an audience. The alternative is to be the media, to be the YouTube channel, to be the podcast, to create great content that people will love and follow and learn more about your product. A good example of this is the company Wistia. Wistia has been a shining example in the software world of how you can grow a business using this strategy, which is content marketing. Their blog has become the number one driver of their business, of their word of mouth business, of people coming to their website because they have the best guides, they have the greatest videos, they're fun and they're helpful. So they basically built a media company inside their own company. They create incredible shows, they have incredible podcasts. Another example of a company leveraging this concept of becoming part of the media is profitwell. If you go to profitwell.com they have a ton of shows, great YouTube shows on pricing and branding and marketing. You get the point. They get brand awareness, you learn more about the product, you build a relationship with them so that when you're ready to buy, you are easily converted. It doesn't cost much to convert because you put all your money and your investment in your own media. Now, strategy number four, diversify your ad spend on different platforms. One of the things I learned about paid advertising, let's say, for example, you only run ads on Facebook and your paid advertising budget is $5,000. Let's say you're going to get less conversions per dollar if you spend $1,000 versus $5,000. It's just how these platforms work, the more money you put in, the more expensive the conversion becomes. For some reason, a lot of it has to do with saturating that platform or that audience on that platform. So split your budget across other platforms. Don't just put all your eggs in one basket. So say for example, you have a budget of $5,000, put a grand on Facebook, put a grand on Google, maybe a couple grand on YouTube or other memes like sponsoring an event or a podcast. By diversifying your spend, no matter how much it is, you don't saturate that market or that platform or the audience on the platform and your campaigns and ads will have more of a shelf life. Like they won't stop working after a month or two, conversions will still continue to roll in at a reasonable price. This is what I found has worked for us with our paid acquisition to acquire customers.

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There you have it guys. Those are the four ways I recommend to lower your cac your cost per acquisition. Number one, offer extreme value. Number two, lengthen the time to nurture your customer. Number three, be the media, create tons of media. And number four, diversify your spend on different paid platforms. Thanks so much for listening to the 100 MBA show. If you love what you hear, hit subscribe so you don't miss another episode. Also, by hitting subscribe on whatever podcast app you love using, you get access to over 1800 lessons in our archives. Go ahead and do that right now. Before I go, I want to leave you with this. You don't want to have a leaky bucket. The worst waste of money in CAC is churn, which means people canceling or refunding your product. So one of the best ways to get the most value from your ad dollars is to have a great product. You improve your product constantly because the better your product is, the more your customers will tell other people. Lowering your cac, the more customers will stay on increasing the lifetime value of the customer, making it actually more affordable for you to spend more on getting new customers, the more money you save on refunds and disgruntled customers. So marketing doesn't cure all. If you don't have a solid foundation if you don't have a solid product is always improving because the market's always getting competitive. Shore up any leaks in your bucket. Thanks so much for listening, and I'll check you in tomorrow's episode Q and A Wednesday. I'll see you then. Take care.

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