Many companies use the customer acquisition cost (CAC) metric – the overall cost to attract and convert customers – to drive their marketing efforts. They look at their total sales and marketing spending used to acquire new customers over a determined period and increase or reduce spending relative to their budgets.
It’s an important metric worth considering. Essentially, your CAC is a monthly reality check on your business. Your profitability will suffer if your customer acquisition cost is higher than expected or budgeted. You may have a great product, but if you can’t find customers, you’ll end up bleeding money before seeing any profits.
It takes a lot of marketing drive and money for many startups to find and convert customers. New competitive startups and offshoots of dominant companies are also trying to get our attention and drive their own conversions.
But recent rule changes around consumer privacy impact how companies find new customers. Third-party ad cookies on Google’s Chrome browser will be phased out at the end of 2022. In the interim, Google is still tinkering with new solutions for brands and marketers (‘Topics’). In most cases, customer acquisition costs will rise, making it more difficult for companies to build revenues.
Building a Customer Experience
So what’s next? How can you build meaningful relationships with your customers without plowing more company cash into CAC? We think the answer is in building a more engaging customer experience as a means to lower customer acquisition costs (CAC).
In our blog post “Moving Past Focusing on CAC to Generate True Brand Loyalty and Customer Retention,” we discussed how building a deeper, more relevant experience for your customers is critical to securing customers and reaping sales. We wrote, “Shifting some of the customer acquisition expenditure towards refining marketing and sales efforts on existing customers will extract more value from the people who already appreciate your brand and have been qualified through your sales pipelines.”
Marketers will need to drill down harder in their customer research to figure out the needs and wants of their existing customers. Understanding their consumer mindset and personalizing the brand experience will be the keys to new engagement with customers.
To do this, brands must think about closer relationships with customers. This can happen by building subscription processes for their products. It’s no longer viable to sell products online in a one-time transaction, notes a recent PYMNTS article. Anyone who spends any time online sees the vast majority of products being advertised and sold in a subscription model. From health supplements to beauty care products, consumers are signing up to pay a monthly fee to receive products regularly.
In running a subscription model, your brand can build a personalized experience with your customers, offering monthly perks, long-term discounts, and more. This can be the foundation of a strong model of relationship commerce, one that creates more engaged customers and helps build recurring revenue streams.
Voice in Search for Personalization
The retail sector alone is already spending over $50 billion on digital advertising, per eMarketer. While most of its current spend is on mobile advertising, experts suggest that more of that money will move to different formats, including connected TVs and voice-activated assistants.
Marketers can build presence and awareness with customers by using a voice-activated assistant to drive relationship commerce. People everywhere are using voice searches via a smartphone or home device. eMarketer analysts estimate that in 2022, about 123 million US adults will use some form of voice assistant tool every month. Those numbers are expected to rise as more consumers get used to working with artificial intelligence and voice personalization.
Drive Sales Through Customer Engagement
To drive new sales, marketers must increase their customer engagement. Building customer relationships powered by voice assistants can help spike customer demand and lift revenues.
Because the cost to acquire new customers is rising, retention revenue from existing customers becomes more important. Brands should want to do whatever they can to keep these customers happy and continue purchasing their products. After all, the lifetime value of these customers will certainly grow over time.
In sum, brands must look beyond customer acquisition costs and toward a more personalized customer experience using relationship commerce. Creating more value for customers will in the end make it easier for brands to build up stronger customer relationships.
Blutag's content management system (CMS) can help marketers build a presence on Alexa or Google Assistant. We can create a natural language understanding (NLU) solution for marketers and brands, to build a voice-driven relationship commerce vehicle with customers.