8 essential marketing strategies to cut acquisition costs by 20-30%

In the current market environment, businesses are increasingly focused on optimizing costs to improve their bottom line. Since marketing acquisition costs often constitute a significant portion of business-critical spending, a few key optimizations can result in significant cost savings. For instance, if your monthly acquisition budget is $100,000, implementing the following techniques can result in savings of $20,000 to $30,000 per month, which adds up to $250,000 to $350,000 per year.

Using our 29 years of combined experience generating over $140 million in revenue for 30+ startups, my colleague Chandani and I put together a cheat sheet to help you unlock guaranteed cost savings on your customer acquisition costs:

1. Conversion Rate Optimization
2. Structured performance marketing campaign optimization
3. Personalization
4. Activating low-cost low volume channels
5. Affiliate marketing
6. Referral Programs
7. Mobile Optimization
8. Making messaging topical

1. Conversion Rate Optimization (CRO)

While most performance marketers focus on improving ad quality and optimizing targeting on platforms to lower CPLs and CAC, the landing page experience often gets overlooked. Conversion rate optimization involves the practice of optimizing your landing page experience to improve conversion rates.?

CRO tests are based on making key optimizations to your landing pages such as content restructuring, adding data and tickers, mobile-specific optimizations, etc., and testing them against your current landing pages to measure the improvement across conversion metrics.?

Industry averages for CRO tests:

1. Success rate - 25%
2. Range of conversion rate increase for each test - 7-15%

In other words, on average 1 out of 4 CRO tests succeed and each test can give a bump of 7-15% on conversion rates for that landing page. In our experience when you start on a structured CRO journey, you can initially expect much bigger and more frequent wins.

2. Structured performance marketing campaign optimization

I haven’t met a performance marketer who doesn’t think they already work on campaign optimization. However, most performance marketers do not do it in a structured manner and optimization decisions are usually ad-hoc.

The optimization algorithm for a performance marketing campaign on most ad platforms functions like a reverse bell curve. At the start of a campaign, the CPL is higher as the platform is trying to find more customers within your targeting who are likely to interact with your ads. As your campaign optimizes, it hits the CPL bottom and then once the audience is exhausted, the CPL starts rising again.

The “Dying Campaigns” zone in the above graphic is the largest waste in your ad spend budget. Performance marketers aren’t often able to detect this zone and don’t stop campaigns when they reach this zone because they don’t do structured time-series analysis comparing each campaign’s performance to the previous day, week, and month. By identifying when your campaign reaches this zone early, you can easily save 5-10% of your performance marketing spending on an ongoing basis.

3. Personalization

An average person sees 4000-5000 ads a day. Most marketers do not realize that their customer spends only fractions of a second viewing their ad. Since all ad platforms charge you based on how many impressions it takes to get each result you want, it is critical to ensure that your ad stands out visually, messaging is on point and personalized to the user wherever possible.

The above image shows 2 LinkedIn ads for a SAAS publishing platform called Quintype. Each ad is personalized using target industries. Instead of creating a single ad targeting everyone who was a customer of Quintype, we created 20+ campaigns for each geography and industry and personalized ads accordingly. Just this personalization reduced our CPL by a whopping 60%!

Personalization is not only limited to ads but also extends to landing pages, blogs, downloadable content & CTAs across the website and has the potential to lower your acquisition costs by 20-30%.

4. Activating low-cost low volume channels

The largest ad platforms like Meta, Google, and Linkedin also tend to be the most expensive ad platforms because that’s where the largest inventory is and most advertisers also are. Since most of these ad platforms work on a real-time bidding model, the price you pay is a direct factor of competition at any given point in time.

Channels like Twitter, Quora, and Reddit do not have as high volumes as the main performance marketing channels and there aren’t a lot of performance marketers in the industry familiar with these channels.? By advertising on these channels, you are unlikely to get very high lead volumes. However, since the competition is lower on these platforms, you can look at CPLs 50-60% lower than the key platforms. By adding these channels to the mix, you can reduce your overall costs by 5-10%.?

This strategy only makes sense if time and resource bandwidth isn’t a constraint since activating and managing low-cost channels can also take up a fair bit of bandwidth. Hence you need to calculate if your performance marketing spend is proportionately much higher than your marketing resource costs otherwise you’re offsetting acquisition spend savings with increased resource costs.

5. Affiliate marketing

Affiliate marketing can be a good source of leads/customers where you’re capping your costs based on the results delivered. Usually, affiliate leads are cheaper than performance marketing leads for a mature marketing team, and hence by activating this channel, your overall acquisition costs can be reduced.

I’ve come across a lot of startups that haven’t had a lot of success with affiliate marketing but those who do get on average ~15% of their revenues through affiliate marketing. What differentiates those who have cracked it from those who don’t?

1. Funnel stage - Depending upon who your affiliate is and the quality of their database, the funnel stage at which you are capturing a lead matters. Unless your sales happen online (in which case it’s pretty straightforward), capturing leads for a sales call might be less effective than capturing leads for a top funnel offering like an app download or free trial.
2. Offer - An affiliate is essentially an influencer recommending you and their community expects and appreciates something in exchange for signing up on your platform. This can be in the form of free virtual credits, add-ons, free trials, or even exclusive access. An offer helps sweeten the deal and push conversion actions.
3. Branding - When engaging with a community, it is an excellent opportunity to build your brand with an engaged user for free. For example, when we worked with an ed-tech startup, we tied up with a developer community to do free mini-webinars for them based on the recommendation of the community. This gave us free visibility through their emails & social media and a high-engagement touch-point where we could showcase our expertise to 100s of potential customers in one go.
4. Nurturing - If you’re capturing leads at an awareness stage for say, a free offering, how you nurture this lead to become a customer becomes really important. Remember, this is not your performance marketing funnel and often requires a custom nurture funnel.

6. Referral Programs

Referral programs are an amazing source of new customers that most companies don’t end up cracking well. However, it is one of those sources where you can cap the cost of acquisition and hence it can help you reduce your overall acquisition costs. Here are key elements to creating a successful referral program:

1. Referral incentive: Your existing customers need to find it lucrative enough to refer people from their network and hence, it's important to have the right referral incentive model. Typical models include a flat fee, contests with lucrative prizes, and an exponential incentive model. The exponential incentive model is one of my favorites and one I've had a lot of success with since every additional referral gives you more rewards than the previous referral. However, this typically only works for a high ticket size B2C offering.
2. Ease of referral: If a customer has to enter information, copy-paste things, or look for referral-related information, your referral program will not work. A customer should only be clicking on things to share referral links. It’s a reward vs effort trade-off for a customer and by lowering the effort, adoption is higher.
3. Timely nudges: When should you tell your customer about your referral program? The best times of course are at all touchpoints where they have received value from the product/service you’re giving them. Another touchpoint is when they have purchased the product/offering. People once convinced about a product will refer others even if they don’t receive value from it yet.
4. Communication: We’ve seen the effectiveness of a referral program increase manyfold once the referrer is made aware of the referral being closed and getting the referral incentive. This gratification is like a dopamine hit to the brain and leads him to actively start referring others.

7. Mobile optimization:

Sounds pretty straightforward right? Yet for most companies, this essentially means creating pages that are responsive. Mobile traffic now accounts for 75-90% of all traffic startups get and yet conversion rates on mobile for most companies remain at least 50% lower than the desktop.

Optimizing your content (landing pages, downloadables, ads) for mobile can have a significant impact on your conversion rates since the baseline itself is so low. Designing for mobile requires an understanding of how consumers use mobile - their attention span, screen size and orientation, and the amount of effort required to type and interact with your content.?

A mobile-first approach is especially relevant for B2C and SAAS companies and in our experience, this approach has helped them save 15-20% in spending.

8. Making messaging topical

Customer buying decisions are hugely impacted by the current market trends and seasonalities. This is why brands go all out to make their ads topical and relevant during the festive season or sporting events. But most marketers consider it essential only for brand awareness campaigns and do not translate the same strategy into their performance campaigns.

When ads are aligned with current events or trending topics, they are more likely to catch the attention of users and encourage them to click. By incorporating timely and relevant messaging, you can optimize ads for improved engagement, higher click-through rates (CTR), and higher conversion rates.

These are two examples of topical messaging ads we developed for Interview Kickstart in the post-Covid appraisal season and recession respectively. Both these ads garnered higher CTRs as compared to the generic domain or benefits-led ads, thereby optimizing the conversion rates, by the sheer power of making the messaging relevant to what the audiences were thinking at that time.

Conclusion:

While not all of these translate to every business, a combination of some of these strategies will definitely help you reduce your marketing acquisition cost by 20-30% on an ongoing basis. If you’d like to get on a call with us to understand how to use our optimization strategies for your business, we offer a 30-minute free consultation that can be booked here - https://calendly.com/consult-marketingmatters/30min or you can also reach out to us on Linkedin.

Here are our profiles:

Anuraj - https://www.dhirubhai.net/in/anurajjain/

Chandani - https://www.dhirubhai.net/in/chandani-mahidhar-57289545/