Strategies and high-impact techniques in generating higher lifetime value per customer

With an endless stream of information bombarding us from all directions, capturing and keeping the attention of customers is becoming a Herculean task for companies. As a result, companies are shelling out more and more cash to distinguish themselves from the white noise and catch the eye of new customers.

It’s now more important than ever to measure that cost to engage and eventually convert a follower into a paying customer. According to Hubspot, a Customer Acquisition Cost (CAC) is defined as the “average amount of sales and marketing expenses you invest to acquire a single customer.”

But never fear — you don’t need to resign yourself to paying top dollar to lure in interested buyers. Employing a few high-impact, efficient strategies to lower those basic costs can help generate a higher lifetime value per customer and bulk up overall revenue.

Measure and analyse

As with any other number, it’s important to establish a measure and establish a baseline, set some goals and track your progress.

CAC is a fairly basic idea with a complicated calculation based on your business model. The two primary numbers that factor into this equation include the number of new customers in a given period and the output of dollars to wrangle those converts. That includes everything from the cost of any campaigns you deploy, and overhead including the salaries of those invaluable sales reps.

For example, let’s say you create a brilliantly designed direct-mail campaign. Calculate the cost for the campaign, including the price of the mailing list, printouts, labour and even the stamps to get everything sent via snail mail. Then measure the outcome. How many customers sought out your product/service as a result of that direct mailer? Divide the two and you have the cost to acquire a new customer via this direct mail campaign.

Now you can apply this equation to find the dollar amount for your overall CAC. Knowing that crucial calculation can help you create a plan of action to minimize that number as much as possible.

For context, the ConversionXL blog and venture capitalist David Skok recommend the lifetime value (LTV) for a customer should be about three times the CAC, depending on how much capital a company has on hand.

Get a handle on your web content

You can expect the majority of your prospective customers are doing their homework before ever contacting a sales rep. So it’s in your best interest to ensure your customers have all the information they need within a few strokes of their computer keyboard.

Make it easy for your customers to educate and build awareness themselves. As Calgary SEO recommends, ensure that the content on your website is clear, concise and makes a compelling case for your product or service. Address any sticking points, because strategic content can quell any fears or perceived risks. Include clear calls to action and believable ROIs for customers to view.

Where possible, also include customer reviews and testimonials to aid in the comparison process.

Offer a ‘try-before-you-buy’ demo

During the ramp up to making a sale, potential converts can grow skittish before agreeing to sign on the dotted line. But sometimes giving them a taste of what you have to offer can cause them to clamber back for more.

If it makes sense for your product/service, court your customers with a free trial. The ability for a prospect to try before they buy allows you to show off how your whirlygig or must-have service is a good fit for their needs. A trial period also builds confidence in your brand and can help convert customers into full-on brand advocates.

Some current examples of companies offering excellent trial-period programs include Amazon Prime and HootSuite Pro.

Reward brand advocates

Remember those brand evangelists I just mentioned? Leverage those kind words and compliments from your biggest fans with a referral program.

Word-of-mouth referrals are still powerful, maybe even moreso in our 24/7 digital world. With constant conversations happening on a variety of forums and social media platforms, you can bet people are likely talking about your brand. And a good word and a stamp of approval from one customer to the next still carries far more weight than any pitch from a well-versed company rep.

In their own way, those brand advocates are doing much of the sales work for you. So take the time to identify those repeat customers and brand ambassadors. Reward them and provide them with an incentive to send you those invaluable new prospects. For loyal advocates who genuinely love your product, they’ll be more than happy to spread the word and will deeply appreciate the extra reward.

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