Customer Retention and Acquisition Cost

You need to find a customer to sell your products and services. Finding a customer is possible in two ways: one customer retention and another customer acquisition. Many businesses do not care about customer retention and focus on customer acquisition. In this article, we will thoroughly explain the cost of customer retention and acquisition.

What is the customer acquisition cost?

Customer acquisition cost (CAC) is the average cost you pay for a customer. This index includes marketing costs, sales, as well as salaries and expenses related to attracting and converting a visitor to a customer.

For example: Suppose you have launched a marketing campaign for two weeks. You sent emails to 2,000 people in this campaign and advertised on four different website banners. Also, you have designed a new landing page so that you can quickly identify those who are added to your CRM system through this campaign and report the costs and revenues.

You have paid for the design of the mail, the design of the landing page, and, of course, the design of the banner. Suppose that for every website, you also pay per click. For the configuration related to the campaign, you spent a total of $ 30, and at the end of the campaign, for 2000 clicks, $ 40 will be paid to the websites that have displayed your banner. If your CRM does not support email campaigns, you will also be charged for sending 2000 emails.

The total of these costs and any other costs you have paid for the campaign to attract sales clues is your overall cost to this campaign. We assume you have spent a total of $ 1000. The first thing that matters in this regard is that whatever your sales are less than $ 1000, your losses are higher.

Finally, if you find 40 new clients from this campaign, the cost of customer acquisition for this campaign will be $ 25.

How to improve customer acquisition cost?

There are several ways to improve customer acquisition cost:

• Improving conversion metrics on the website: Use Google Analytics, A / B test, design landing page, site speed and mobile compatibility to improve your website.
  
• Increase user value: Try to get customer satisfaction. One of the best ways to achieve this goal is to provide better service and products. By providing better quality products, you will be able to show that the customer is precious to you.
  
• Customer Relationship Management implementation (CRM): Almost all successful companies that their customers revisit are using one type of CRM. This use may include a sales team with sophisticated processes and a sales tracking system, an email list and automatic SMS, blog posts and website articles, loyalty programs, and other techniques that, in addition to the customer itself, will attract loyalty to him.
  

Customer retention cost

The cost of Customer retention is all that is required to retain and keep the customer. In general, this cost is five times lower than the cost of customer acquisition. Why does not business pay attention to this? By doing so, you can reduce costs and sell more products and services. The advantage of maintaining the old customer is that they bring with them, new customers.

Customer Retention vs Acquisition Cost

If we want to compare the cost of customer acquisition and customer retention, I must say that both are important. Companies should pay attention to both issues and use at the right time each one. But in general, it should be said that customer retention costs are more appropriate for companies and startups because they need to pay less. For keeping Customer must be the satisfaction of him. Although customer retention is essential, you should pay attention to customer Acquisition and try to have a good relation with them until keeping their loyalty.