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Written by Kimberlie Williams
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Customer Acquisition Cost, or CAC, is the average cost that goes into acquiring one of your customers. For every dollar you put into acquiring a customer for your software, you want your customer to return at least over triple that amount. That way you are covering your customer acquisition cost and returning a substantial profit. Now that is the ideal, but it takes a lot of investment, time, and effort to get there. Reducing CAC is more than lowering amount of money that goes in acquiring customers. The goal of lowering CAC should be to decrease the time it takes you to turn the cost of acquiring a customer into a profit. This period of time is called the payback period.

So what leads to a longer payback period?

1. Your Customer Lifetime Value is Lower Than Your CAC

Customer Life Value is the profit an average customer will bring to your business during their commitment to your software offerings. If your customer is not bringing in enough money to offset the cost of acquiring them, then you need to reconsider your approach. You’d be surprised how much your marketing and sales costs diminish and your overall revenue rises when you market to someone who views your software or business as ideal solution. Every business has at least one or more model customers. These customers have similar personalities, aspirations, challenges, and see high value in what your customer has to offer value. Buyer Personas are one technique to make sure you’re marketing to the people who are the best fit for your software. 

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2. You Know the 'Right' Customers, But You're Not Attracting Them

Making sure that you understand who the right customers are for your business will make you more equipped to attract the customers who best suit your software. Your marketing team can use this information to create content that answers their needs and questions and making sure your website is built with search engine optimization. Your page titles, keywords, formatting and URLs that utilize search engine optimization will steer users searching related topics right to your website. SEO attracts people to your company like traditional outbound marketing techniques such as television commercials, but for a fraction of the price, and with a much stronger interest in what your software has to offer because they specifically sought out the information that brought them to you.

3. You're Not Investing in Retaining Your Customers

Keeping more customers with your company means you won’t have to acquire new customers to make up lost profit. Look into improving your customer experience by creating custom software opportunities, improving customer service, and creating special content like advance releases to reward loyal customers. If you delight your customers, they will end up becoming some of your best promoters, excitedly sharing with other people how your product helps them. The added incentive of referral benefits will also help scale your business.

4. You're Not Creating Content for Your Customers

If there is not enough content or opportunities for your customers and potential customers to familiarize themselves with how your software would help them, your company could be losing out in a big way. Software companies often invest too much money into traditional marketing techniques like outbound marketing. Outbound marketing such as print ads, unwarranted telephone calls, and radio ads, blast out promotions to anyone in the area. Outbound marketing is less effective and more costly than an inbound marketing approach. Inbound marketing attracts your customers by creating content like blogs and offers around your customers' industry challenges, goals, and wants. It helps pull in your target customers by giving them the information they seek out, nurturing their every question and concern until they are ready to work with your company.

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5. You're Not Using Marketing Automation

Marketing automation software can further free up your team’s time and reduce costs while increasing the reach of your company by allowing you to set up your marketing tasks to automate. On average, marketing automation allows minutes of your marketing and software team’s time to be expanded to days worth of marketing content. Now don’t try to automate everything, but focus on translating tasks that are repetitive and don't need much variation when using marketing automation software. Think emails, social media posts, and software recommendations. It can also be set up to take into consideration who your customer is, their interactions with your company, and what they’re interested in, so it’s less spam and more highly targeted content that is helpful for them. Marketing automation can also provide analytics and testing that can help you with attracting, converting, closing, and retaining your customers.