Reducing Customer Acquisition Costs through SEO

The worldwide web has become the most effective lead generation platform today. And marketers widely use online advertising and outbound strategies for customer acquisition.
These strategies have been helping businesses grow the customer acquisition rate per month. And companies also witness a growth in their total revenue per month.
But, does growth in total revenue and customer acquisition rate define business success?
Well, a quintessential part of your business development responsibilities is cost management. And so, you need to track the cost you have been investing in customer acquisition. If you are shelling out a fortune on outbound efforts or online ads, reconsider your strategy. You might be working at a high CAC.
SEO, on the other hand, can help reduce your customer acquisition cost significantly. Now, when we talk about SEO as a customer acquisition strategy, let’s see some statistics:

  • 94% of users find organic search results more preferable than paid results on SERPs.
  • Moreover, 40% of the revenue generated by businesses is through organic web traffic. Audiences trust organic Google results more than the paid advertisements.

The above stats depict how SEO can replace your ineffective customer acquisition strategies. So, in this article, we will comprehend:

  • What is Customer Acquisition Cost?
  • Importance of Reducing Customer Acquisition Costs
  • Tips to Reducing Customer Acquisition Costs Using SEO
  • Customer Acquisition Costs & SEO

What is Customer Acquisition Cost?

CAC refers to the cost a company invests in various strategies to acquire new customers.
It can be formulated as:
It reflects the business development efficiency of a company. This metric gained popularity with the growth of online customer acquisition campaigns. Here, one can easily measure his investments and the returns he draws from his campaigns.
CAC is the ratio of the total number of customers you acquired from a campaign to the total cost invested in this campaign. However, a campaign includes various types of costs contributing to the total investment. These costs include:

  • The advertising cost you pay to the ad platform. Starting from Google ads to social media and third-party site ads.
  • The cost you pay to the resources who worked on this campaign. It includes your marketing team and sales team.
  • Cost of the paid tools you employed for this campaign
  • The cost for promotions on other platforms and remarketing
  • The cost paid to influencers, bloggers, or any other external sources, etc
  • Other production and execution costs

Importance of Reducing Customer Acquisition Costs

1. Increasing the Total Profit and Returns

Unless you study CAC, you cannot calculate the returns you draw from your investment. You can implement various strategies that reduce your cost per acquisition. It means earning the same number of customers by reducing the total investment. So for the same investment, you can draw higher returns. And these returns reflect your total profit as a company.

2. Improving the Conversion Rate

CAC metrics help you analyze the conversion rate you are drawing out of your campaigns. If your campaigns drive you decent CTR but a low conversion rate, optimize them.
You can compare CAC for different strategies to analyze what offers higher conversions. It would help you reduce your final campaign budget. You can now draw more conversions for the exact campaign cost.

3. Identifying the Right Target Audience

Customer acquisition cost reflects the efficiency of your lead generation campaign. So, if you have a high CAC, the chances are that you are targeting the wrong audience.
You might need to pen down the ideal buyer persona, pin the right demographic, and show the right message. Analyze and compare your CAC over multiple audiences and demographics. (continuation line )to modify the campaigns to target precise audiences like gender, region, age, etc.
And use CAC metrics to tap the right opportunity by finding high-potential customers.
Further, it would help if you also made sure that the spending limit of the audience you choose is also the highest. The goal is to grow the revenue for the same investment.

4. Optimizing and Establishing the Most Productive Strategies

As you compare your monthly conversions and revenue, also compare your investments. Your CAC reflects the returns from your investment and your business efficiency. You might find it challenging to increase your investment to grow your acquisitions. However, reducing your CAC helps you grow the no. of acquisitions from your investment.
You need to research the average CAC in your niche and compare your position. According to PropellerCRM, here’s the benchmarked CAC for some of the niches.
With this, reducing the CAC allows you to optimize your campaign strategies. You can find the most effective promotion platforms and strategies for your business.

Tips to Reducing Customer Acquisition Costs Using SEO

As aforementioned, SEO has great customer acquisition potential and can reduce your CAC. So, here we bring some tips for the same:

1. Show Empathy Towards Your Customers

As you build your target audience’s buyer persona, keep the primary focus on their pain points. Analyze their behavior, interests, common queries, and their demographics.
You can use Google Analytics to find the behavioral flow of the users and understand their concerns.
Produce content to help your target audience and solve their queries in the best manner. This type of content will attract qualified traffic that results in higher conversions. Thus, reducing the customer acquisition cost.
Produce sharable content that gets the maximum reach. Moreover, produce content in your customers’ commonly-used language. Create ‘How To’ articles, offer exclusive tips, and write problem-solving content.
Keep building such content around the main queries of your target audience. It will help them recognize and connect with your brand, thus boosting conversions.
Stop asking ‘how can I attract potential customers.’ Instead, ask, ‘how can I help my ideal customers solve their common queries.’
Do make sure you write high-quality content for your target audience. Google appreciates quality content that is viable, valuable, and useful for the users. Try to establish fruitful connections with your potential customers and win their trust.

2. Establish a Notable Brand Reputation and Social Proof

Your brand’s online reputation has a direct impact on your conversions. You need to establish a positive sentiment for your brand through social proof. And SEO can help you here. Some SEO activities that will help you grow social proof and reduce the CAC include:

  • Creating a business profile on various popular listing sites. continuing above the line” Sites like blograma, capterra, Yelp, etc., build a reputation along with providing a large number of potential traffic.
  • Promoting the brand through reputed media websites
  • Building positive sentiment by encouraging positive reviews
  • Display notable social proof on your website and listings (trust badges, no. of users, achievements, testimonials, etc.)
  • Getting your content posted on high-authority blog sites and platforms
  • Employing influencer marketing and blogger outreach
  • Growing rank positions in the SERPs
  • Boost social media reputation<

These efforts will help you grow the popularity and trustworthiness of your business. It will attract qualified leads, help users make easy decisions, and increase conversions. Thus, eventually reducing the customer acquisition cost.

3. Build An Authority

The best way to build trust among your audience is to project your business as an authority. For instance, if you offer SEO, you must produce content that helps them with SEO.
It can include small tutorials, how-to articles, problem-solving guides, and expert SEO advice. You can produce long-form authentic data that covers almost everything related to SEO.
This is why Search Engine Journal, Search engine land, etc., are gaining plenty of traffic and business.
These materials will help your business stand-out as an authority for SEO. And your authority gives customers a legitimate reason to buy from you.
Even search engines follow the E-A-T ranking factor. It represents the Expertise, Authority, and Trustworthiness of a content piece. If your content meets these parameters, search engines believe it is useful for the users. And so, it has a higher ranking potential.
An authoritative and valuable content also attracts backlinks from high-authority sites. And it helps the content page rank higher in SERPs. Your customers should find your brand the most authoritative solution to their problem.

4. Boost your Link Building Efforts

Now, when you gear up for link-building, you are growing your site visibility and authority. It will, as a result, help you attract more organic traffic. And your site’s organic traffic can earn you more conversions than the paid traffic. Moreover, organic traffic costs less than paid traffic. So, it can significantly reduce the customer acquisition cost for your business.
It is advisable to produce authentic content that is readily shared by reputed sites. You can analyze competitor backlinks and build quality links on their referring domains. There are some free SEO tools like Ahrefs backlink checker, which help you analyze several competitor links freely.
There are other ways to grow your backlinks and visibility like:

  • Cover articles or news on the latest trends in your industry
  • Pitch your posts to popular bloggers
  • Connect with other businesses in your niche for exclusive surveys
  • Build a hub content with several inbound and outbound links

These can help you elevate your site’s authority, grow its rankings, and increase traffic. The organic traffic you gain reduces your CAC.

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5. Optimize for Qualified Traffic and High Conversion Rate

Your conversion rate significantly impacts your customer acquisition cost. You can increase your conversion rate by attracting qualified content to your site.
Now, some effective ways to attract qualified traffic through SEO include:

Using the same language as your target audience:

You can assess the dialect or common language your target audience use on the internet. Make your content such that they can easily comprehend it and take the desired action.

Study the search terms that bring you high conversions:

You need to open your analytics data to screen the performing keywords and search terms. Create wider content around the topics in its vicinity to pull potential audiences.
Use these more smartly in your content, and it will help increase the conversion rate.

Add LSI keywords to your content:

You can analyze the user reviews to source the keywords they commonly use to refer to your offerings. These keywords are your important LSI keywords. It would be beneficial to use these keywords in your content.
LSI keywords help grow site visibility and attract qualified traffic that converts better. Thus, reducing the customer acquisition cost.

Gain reviews and a shout-out from the right bloggers and influencers:

Find the most loved influencers or bloggers in your niche. Ask them to cover your content and offer your website a backlink. This backlink can attract qualified traffic to your website.

6. Combine your Online Advertising and SEO Efforts

A prudent move is to lead with combined SEO and PPC efforts. While PPC sources instant traffic via paid channels, SEO attracts free organic traffic. You can use the data from your PPC efforts to inform and optimize your SEO efforts. This data includes:

  • The keywords offering the highest click-through rate. A detailed report of CTRs for the keywords can be seen in the search console.
  • The keywords offering the highest conversions and conversion-rate
  • The landing page and content that attracts the highest conversions
  • The messaging or ad copy that attracted the best conversions

You can use these metrics to optimize the content and keywords in your SEO strategies. It will help you increase your conversions from organic traffic. You can also use your SEO data to inform your PPC strategies. These strategies will help you reduce the all-inclusive CAC.

Relevant : Why Is SEO (Not PPC) Still the Best Choice for Your Business?

7. Elevate the Customer Retention Rate

If you are losing your previous customers at the same rate you are acquiring new customers, your CAC remains high. On the other end, if you have a high customer retention rate, your CAC stays low.
When you earn repeat business from your clients, it is equivalent to new acquisitions. So, while you add new customers to your funnel, also retain existing customers. A growth in your customer retention rate helps you reduce the average CAC.
It indicates high ROI for the CAC value.
You must improve your customer services, resolve their churns, and improve client handling. These efforts will increase your customer retention rate, keeping your CAC low.

8. Employ Retargeting

Retargeting helps businesses attract potential customers back into the conversion funnel. Retargeting strategies offer higher conversion rates than most one-time campaigns. Here the users are familiar and have shown interest in your offerings in the past.
For instance, we surfed through the SEMrush website, and after a while, we started seeing these ads on Facebook, Instagram, and other third-party sites.
Remarketing ads help businesses gain good conversions at low CAC. Remarketing Facebook ads and Google Display Network are used widely by marketers. Businesses also use push notifications, email, and outbound strategies for retargeting.
You need to analyze the platform and channel to reach your prospects in the best way. Moreover, you need to retarget the customers at the right stage of the funnel.
The right retargeting strategy will grow conversions and reduce the customer acquisition cost. Retargeting usually works wonders for online retail and on-demand service businesses.

9. Reduce Bounce Rate

Whether it is your PPC landing pages or site pages, you need to reduce your bounce rate. It will help you boost the conversion rate.
A website with a lower bounce rate and better user engagement generally offers low CAC. Moreover, positive user metrics are crucial for SEO.
Data metrics like longer page sessions and low bounce rate increase the ranking potential.
You can get a detailed report about each page in Google Analytics and improve to maintain a bounce rate below 30%.
So, one can reduce his webpage bounce rate by:

  • Optimizing the website design and making it responsive
  • Increasing the relevancy and quality of the content
  • Creating the right content structure
  • Smart use of Heading Tags and Images with Alt Text
  • Adding LSI and long-tail keywords to the content
  • Optimizing the CTAs used on the webpage

A reduced bounce rate means a higher conversion rate. And it reduces the average customer acquisition cost. A low bounce rate is essential for PPC ads, where every click costs you a certain amount.

10. A/B test your Strategies and Campaigns

Paid advertising allows you to implement A/B tests for your strategies and campaigns. You can compare your landing pages, keyword sets, content, ad copies, and messaging. A/B testing helps you find the strategy that, as a result, offers you the lowest CAC.
After employing an A/B test, wait for a sufficient amount of time to collect comparable data. Then you can compare important metrics like bounce rate, CTR, conversion rate, and CAC.
Analyze the various parameters that help reduce the customer acquisition cost. And craft an efficient strategy based on these parameters.
It is advisable to use these metrics to inform your SEO strategies as well. It will help you reduce the CAC for your organic traffic as well. You can further increase your SEO efforts to reduce the dependency on paid ads.

Customer Acquisition Costs & SEO – FAQs

1. What Is the Formula to Calculate Customer Acquisition Cost When Employing SEO?

When you use SEO for customer acquisition, your CAC depends on your SEO implementation cost. The total SEO implementation cost includes:

  • The cost of man-hours spent by the SEO professionals (involved in your campaign)
  • The cost of paid SEO tools that you use for your campaign. which cost a lot as a whole in the long run business
  • The cost of man-hours spent by the content and marketing team
  • Any other cost involved in executing the SEO strategy

So, the ideal formula of CAC is: Customer Acquisition Cost = Total SEO Cost/ Total Number of Conversions.

2. What Are the Most Effective Tactics to Reduce Customer Acquisition Costs?

Most businesses use online channels to increase customer acquisition and reduce CAC. Some of the most effective techniques include:

  • A combination of SEO and PPC strategy that is optimized using the analytics data
  • Retargeting strategy including remarketing on Facebook, Display Network, and notifications
  • Optimizing the Ad campaign by adding a negative keyword list, and new ad copies, etc.
  • Building commendable brand reputation and authority through SEO and link-building efforts
  • Employing tactics to increase customer retention and generate repeat business
  • A/B testing the various campaigns for multiple ad copies, landing pages, and keyword sets

3. How Can I Calculate the All-Inclusive Customer Acquisition Cost for My Business?

The total cost a business invests in acquiring customers is a product of several costs. The all-inclusive cost also depends upon the customer acquisition strategy you use. You might use a paid ads strategy, SEO, Email marketing, or outbound marketing, etc.
Here I list down the essential costs to consider:

  • The cost of man-hours invested by your resources (marketers/developers) in the campaign
  • The cost of the paid tools you use for the customer acquisition strategy
  • The advertising cost you pay to the ad platform, blogger, or external resource
  • The cost of man-hours invested by the sales team in the final onboarding process
  • The cost for promotions on other platforms and remarketing
  • Other production and execution costs
  • Overhead cost, including infrastructure, hardware setup, internet access, etc.

The average CAC = Total cost of customer acquisition strategy/ No. of customers acquired.

4. How Is Customer Acquisition Cost Different from Customer Acquisition Rate?

Customer acquisition is the practice of winning new customers through various strategies.

Customer Acquisition Cost (CAC)

CAC is the ratio of your customer acquisition strategy’s cost to the no. of customers acquired.
For example, you invest $1000 on Facebook Ads (including resources and additional costs) to generate 200 conversions. Then the customer acquisition cost: $1000/200 = $5.

Customer Acquisition Rate (CAR)

It is the ratio of the total conversions from a campaign to the total traffic through this campaign.
For example, you earn 5000 visitors from your Facebook Ads campaign, and you convert 1000 of them. Then the customer acquisition rate: 100/5000 = 0.02.
Both CAC and CAR define the efficiency of your customer acquisition campaign. And your ideal goal is to reduce the CAC and improve the customer acquisition rate.

Key Learnings

Customer acquisition cost is a critically important metric to grow your total profits. It exudes your business development efficiency.
Your CAC is equivalent to the returns you draw from your marketing investments. And so, it is crucial to scale down your CAC. In most cases, growing your customer acquisition rate can reduce your CAC. However, it depends upon your customer acquisition strategy.
SEO is another valuable customer acquisition strategy that helps reduce CAC. There are several SEO tactics to scale down the customer acquisition cost.
Your content theme, quality, and authority have a crucial impact on your CAC. Moreover, your brand reputation and social proof improve your conversion rate.

Relevant : Impact of Bad SEO on Your Business Brand Reputation

Use retargeting and improve your customer retention rate to reduce your CAC further. It is advisable to use PPC along with SEO.
In the end, also pay attention to the value you draw from each customer. You can use the above tactics to lower your customer acquisition cost using SEO. Further, if you wish to build and execute productive SEO strategies, connect with us.

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Joseph Schneider

He has spent more than 12 Years in strategising and executing SEO campaigns. He is interested to writing Digital-marketing, PPC and Social Media Marketing related topics.