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Is your CAC too high?


Over the last number of years we have experienced a major leap forward for technology advances. On the business application side new digital selling tools have become available, so you can design digital lead-to-customer journeys, using inbound and outbound marketing activities. We have now reached a point where the availability of technology has become so immense, it is hard for companies to understand and implement the right solutions for them.


These days, business applications have become a lot smarter.


Business applications and technology do contribute to a better and smoother running sales and marketing process, but without getting the users and people involved engaged and ramped up, they will fail. Before we focus on digital sales and marketing applications and technologies, we need to define why we are even implementing these. In our journey providing applications and technology to subscription-oriented businesses, a key driver for transformation is customer acquisition costs (CAC).

A quick search on Wikipedia gives us the following clarification:

Customer Acquisition Cost (CAC) is the cost of winning a customer to purchase a product or service. As an important economic unit, customer acquisition costs are often related to customer lifetime value (CLV). CAC is an important metric to manage a subscription driven business, as it is not always certain what a customer’s lifetime span will be. The higher your CAC, the more lifetime run-rate of subscriptions are needed to absorb CAC.


Understanding your CAC


It does not matter if you are a B2B or B2C subscription business, or if you sell software, products, or services. You must get to grips with the costs related to acquisition of new customers. Let’s get down to the details.

#1 — Continuously improve your sales and marketing business capability

Subscription sales and marketing is not fundamentally different, but it does require you to understand customer relationships based over a longer period. That means we need to stay in touch with customers and not allow them to disappear from the sales radar, once the first deal is signed up. Creating a lasting relationship is critical. Making big shifts is risky, so building a continuous improvement roadmap is a better, more controlled way forward, resulting in reduced CAC and ultimately getting more customers through the door.

#2 — Use your business data, all of it

These days, business applications have become a lot smarter. It has never been easier to connect applications and mesh data into meaningful insights. With AI, we can interpret data and push out insight. Is this customer green or red? If red, what are the recommended actions?

  1. But without getting into a tech-overload discussion, how can such a level of business data usage be achieved? Here’s some directions:
    Select CRM and Customer Service solutions that integrate your communication channels to your customers. Automatically link emails and calendars to customer accounts and have all data from there linked to your customer account. Make sure you deploy intelligent AI services that can create insight, such as lead and opportunity scoring, and relationship health based on email content. Focus on time spent per lead or opportunity and benchmark the data.
  2. Setup continuous workshops and sessions with sales and marketing teams and create understanding and awareness about how these applications and technology can make their day better and more effective.
  3. Facilitate application and data management. Often businesses think that this is all done by a tech partner, but the results are best if data ownership and management is performed as part of operations, in-house.

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