Growth Framework

Reduce Customer Acquisition Costs

Tuesday, August 28, 2018

CMO Growth Framework : Sprint 6

Now that our marketing engine is optimized to drive new customers, it's time to look at reducing customer acquisition costs (CAC) and improving lifetime value (LTV).

1. Conversion rate optimization

Here we dig into funnel analytics to identify friction points in your purchase funnel. This includes website, landing pages, onboarding experiences, and lead nurturing campaigns. Then, we'll work on a plan to improve conversion rates. If conversion rates go up, naturally our CAC will decrease.

2. Ad optimization

For paid channels, we'll analyze CTR and conversion rates for all ad units. We'll throw out poor performing creative and iterate on creative that is performing well. This is particularly important for display ads purchased on a CPM basis; increasing click-through rates will decrease our eCPM and subsequently reduce our CAC.

3. Customer experience deep dive

Next is a deep dive into the customer experience (CX) to ensure customers are being onboarded correctly and receiving maximum value right off the bat. We want to prove quickly that our product solves their pain. We'll do a critical review of automated onboarding assistants, customer success teams, live chat logs, and analytics to determine areas of improvement.

4. Upsell at the point of utility

Slack and Dropbox do this extremely well.  Slack is completely free to use until you need more than 10,000 archived messages or 5GB of file storage. At this point the user is deeply hooked on the utility (pain point solution) and is likely to enter their credit card. Dropbox gives you 2GB of storage for free and when you start encroaching on your storage limit, an in-app notification politely reminds you that your next upload might fail unless you upgrade to a paid account. Tactics like these are an integral part of product-led growth which drastically reduces CAC and improves LTV.

Do you have a question? Contact us now!

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