Generating leads is good, but you still have to do it at the right price, even on extremely coveted targets. In this article, you will discover how the implementation of an inbound marketing strategy meets this objective of controlling customer acquisition costs, in order to guarantee and increase the return on investment (ROI) in the long term.
What does the customer acquisition cost?
The calculation of ROI is based on a relatively simple equation. On the one hand, we have the expenses, that is to say, the resources committed to grab the attention of a prospect and convert him into a customer. On the other hand, we have the turnover that will be generated by this customer throughout the commercial relationship that unites you: this is the Customer Life Value (CLV). The challenge is to ensure that the value generated overtime exceeds the investment devoted to the customer acquisition strategy.
Definition of Customer Acquisition Cost
Checking the balance of this equation implies having a clear vision of the expenses granted. The Customer Acquisition Cost (CAC) therefore represents the first variable to monitor. It is defined as the ratio between all acquisition expenses and the number of customers actually acquired.
The CAC is an average: it, therefore, represents a key performance indicator (KPI) against which you will be able to measure and verify the performance of your acquisition levers. For example, calculate the customer acquisition cost associated with each of your marketing channels (blog, website, SEM, social networks, etc.) and compare it to the overall CAC of your commercial activity: you will certainly have surprises!
How to calculate the customer acquisition cost?
The exercise is only worth it if it is exhaustive! We must therefore ensure that we really include all the investments dedicated to sales and marketing activities, from sales and marketing salaries to marketing acquisition costs (advertising, content creation, software licenses dedicated to prospecting). and conversion&hellip. Then divide this total by the number of sales generated: you will get your CAC.
An example? Take a company that spends 500,0000 rs per year on its marketing and sales force. If it generates 100 sales over the period, its customer acquisition cost stands at 5,000 rs. With 150 sales, the CAC is only 3333 rs.
Why is CAC a very important KPI?
Calculating the CAC is essential for measuring the profitability of activity and managing its marketing budget. Supported by the right attribution models, it allows resources to be allocated based on the relative efficiency of each channel. It is also used to arbitrate more effectively between the expenses dedicated to the generation and the qualification of leads (the Cost per Lead or CPL) and those which are devoted to the maturation of the prospect and the conversion.
Ultimately, calculating ACC helps you focus your spending on the most effective levers.
How can inbound reduce your customer acquisition cost?
Inbound marketing serves precisely this dual objective of reducing and controlling marketing costs. The principle? Trigger interest naturally in the prospect, without resorting to traditional canvassing (outbound marketing). The implementation requires a content strategy designed precisely to provide answers to the problems of your potential customers. In this way, it is they who come to you and not the other way around!
What you need to know about B2B lead generation
The approach is of particular interest in the B2B world, where decision-makers are already overwhelmed by demands. It also has the advantage of allowing a more precise qualification: since the content viewed by the target responds to a very specific business problem, it provides information on the prospect's level of maturity. This avoids increasing its CAC by contacting a buyer who is not yet ready to take action. An essential precaution in the business market, where purchasing cycles are much longer than for a general public target.
The advantages of inbound marketing in B2B
The corollary of this improved customer knowledge: inbound marketing allows you to work on your prospect over the long term. This time we adopt a lead nurturing perspective, an approach that consists in supporting its target throughout the process of reflection that constitutes the conversion tunnel.
Not all prospects arrive at the same level of maturity! Some people need a complex notion to be popularized and explained to them why such and such a subject deserves their attention. Others have already taken this step and want to read an article that offers them a concrete action plan. Sometimes, you have to go so far as to publish technical content responsible for answering very pragmatic questions. All are an opportunity to promote the expertise of the company in the eyes of the potential client.
An effective inbound marketing strategy, therefore, takes a long time. It provides for a form of gradation in the issues addressed in order to gradually bring the prospect to the stage of maturity required for the salesperson to come into play with a maximum chance of success.
The implementation of a marketing automation tool is proving to be a valuable asset in this context. It offers the company a cockpit from which to manage all the actions according to the conversion rates measured in the field.
The higher the acquisition costs, the more the CAC becomes a key indicator! Inbound marketing allows you to launch a customer acquisition strategy that is resolutely focused on the long term, capable of both generating leads and optimizing their conversion. The approach also provides the tools necessary for the continuous analysis of the various actions, so that all expenses effectively contribute to optimizing acquisition costs and therefore increasing profitability.