How to Improve Your SaaS Company’s Customer Acquisition Cost

Published by Smash VC on September 28, 2022

Every new customer you acquire carries a hefty price tag.

Stats say that an average SaaS business runs through 92% of its first-year revenue on customer acquisition. The overall customer acquisition costs have gone up by 60% over the past five years.

Another fact to keep in mind is that consumer trust in brands has been eroding steadily for quite some time. Now, 55% of customers trust the brands they buy less than they used to.

It’s obvious that sticking to inefficient customer acquisition strategies is a recipe for disaster.

Understanding your CAC will help you gain valuable insight into your marketing strategies and their effectiveness. By keeping track of this metric, you will also be able to analyze your pricing model, churn rate, and customer success – all of which will allow you to scale your growth and improve your company value.

Here are some tips to help you optimize your SaaS company’s CAC.

Build a Granular View of Your Leads

Not all your leads are the same. Some are an excellent fit for your product, while others are only tire-kickers that won’t convert no matter how persistently you nurture them.

So, how do you identify leads that are most likely to purchase from you?

You’ll need to examine the actions they perform on your website or their responses to your marketing campaigns.

Retargeting is a powerful tactic to stay top of mind with your potential customers and capture their attention. There are two types of retargeting:

• Pixel-based retargeting that lets you serve anonymous website visitors targeted ads
• List-based retargeting, with which you can target leads that are already in your database

Once a potential lead visits your pricing page or spends a certain amount of time reading your blog posts, you can safely conclude that they’re interested in your product.

It’s even possible to segment your audience and send them hyper-focused content based on the level of interest they’ve shown. Set up triggers and create a lead scoring model to determine leads that are ready to be moved forward.

This way, you won’t waste time and effort on those who accidentally stumbled upon your site or don’t actually intend to make a purchase. Since retargeting is an automated process, it will amplify your lead generation process and reduce customer acquisition costs.

Optimize Your Site’s User Experience

Your website is your digital shop window. When potential customers land on your site, they expect to easily find all the information they’re looking for. Different glitches, such as poor mobile optimization or pages that take too long to load, are conversion killers.

For example, 89% of consumers opt to purchase from a competitor after a poor website user experience.

Here are UX design best practices you’ll want to implement:

1. Keep things simple

Clutter will confuse your visitors and make it difficult for them to navigate your site. Use white space to give your website some breathing room and help your prospects process the information you want to communicate.

2. Make your site accessible

People with vision or hearing impairment should also be able to use your website. This way, you’ll show that you care about your audience and increase the number of people who can interact with your site.

3. Improve website loading speed

With every additional second your website takes to load, your conversion rates drop by more than 4%.

4. Make sure navigation is intuitive

To achieve this:

• Be consistent and place navigation elements in the same place throughout the website.
• Link your logo to the homepage.
• Distinguish hyperlinks from the rest of the copy.
• Use clear language for labeling menu items.
• Make the copy actionable and to the point.

Building a business tech stack can incur some substantial expenses. But don’t forget that these tools can significantly slash your CAC, which is a driver in the valuation of your company. In other words, it’s a wise investment since having a low CAC means your company is worth more.

Automate Your Marketing and Sales Processes

Reducing human involvement and making your marketing and sales processes lower-touch means that you’re also lowering the cost of acquisition.

Luckily, sales and marketing automation doesn’t have to come at the expense of personalization. Modern automation tools offer powerful features for tailoring your messages and outreach to a great extent.

Some of the tools you can use to streamline your tasks and operations include:

• CRM or marketing enablement software gives you a 360-degree view of all your leads and their status. You can sync data, set up all kinds of automation, manage your pipeline, amplify lead nurturing, and create custom workflows. HubSpot and Pipedrive are the best-in-class CRMs with a wide variety of features.
• Email automation is crucial for improving your email marketing performance. It allows you to create and schedule your email campaigns in advance, track your metrics, and set up triggers so that the system launches personalized emails after a prospect performs a certain task. MailChimp and Drip are among the most popular platforms in this category.
• Prospecting automation – Given that the activity of finding new prospects is particularly time-consuming, using an automation tool to create lists of new leads, update their information, and keep them engaged can be of great help. LinkedIn’s Sales Navigator is a must if you want to ensure a steady stream of fresh leads.
• Social selling tools let you monitor what customers and competitors say about your brand on social media, join these conversations, control your reputation, generate new leads, and engage in social selling. Hootsuite, Mention, and BuzzSumo can help you with all this.

Optimize and A/B Test Your Pricing Page

Your pricing page is a make-it-or-break-it factor for the success of your entire sales process.

If it’s not properly optimized, all your previous efforts to find, attract, and nurture a lead will be in vain, sending your CAC through the roof.

Pay attention to the following when structuring and designing your pricing page:

• Use clear and straightforward copy. Highlight the benefits and align them with the price so your potential customers can easily understand what they get. Too many details can be overwhelming, so include only the necessary information about what each plan includes and how much it costs.
• Your prospects have fear, uncertainties, and doubts (FUDs,) so make sure to address and handle these potential objections upfront. You can do this by answering some frequently asked questions about your product.
• Lack of trust can be a major obstacle in this stage of the buyer’s journey. Include trust badges and social proof to show that your SaaS company is legitimate and that your potential customers don’t have to worry about the safety of their personal information.
• FOMO and scarcity play on your prospects’ feelings of insecurity and fear that they will miss a great opportunity. Using different timers and limited-time offers will prompt your prospects to convert.
• To help your customers pick the best plan that suits their needs, make sure to clearly communicate the difference between the different plans you offer.
• A prominent and visible CTA with actionable copy will encourage your prospects to take action.
• A/B testing will tell you what works and what doesn’t, so don’t neglect this part of the process.

Make Use of Affiliates

Affiliate marketing is an effective strategy for reducing your CAC while simultaneously boosting your ROI. With paid advertising, you have to pay clicks or visits, regardless of whether they result in conversions. This means spending your marketing budget on opportunities that might never materialize and turn into paying customers.

By working with affiliates, you won’t have any upfront investments. You pay them a predefined fee only after a conversion takes place.

So, it’s a safe bet.

Besides, since affiliates are bringing you new leads, there’s no need to hire sales reps – and that’s another way to cut acquisition costs.

Streamline Your Content Marketing Efforts

Content marketing is necessary for answering your customers’ questions and educating them. While the initial outlay might be higher than that of paid advertising, the long-term benefits of this strategy are greater and scale better.

For example, a single blog post that ranks well and does a great job of generating leads can become a sales channel for life.

By producing high-quality content consistently, you can attract a lot of new prospects and keep them coming back. In addition to that, content allows you to show your expertise and establish credibility with your audience.

Since trust is a critical conversion driver, becoming an authority in your industry through content will ultimately boost your lead generation efforts, subsequently reducing your CAC.

Wrapping Up

Lowering your SaaS company’s CAC should be among your top priorities. Monitoring this metric and optimizing your sales and marketing efforts accordingly will not only help you grow your business but also increase its value. The trick is to identify the most efficient and profitable marketing channels and fine-tune every detail of your strategy.