With the rise of e-commerce, small business owners are faced with a new challenge – Customer Acquisition Costs. This is the cost of getting a new customer to purchase their product. The higher the customer acquisition cost, the more difficult it is for small businesses to grow and compete with larger companies. The first step in solving this issue is to figure out the root cause of the problem. There are two primary reasons why a company might have a high customer acquisition cost, and they can be solved by making adjustments to their marketing strategy, or by changing the way they do business.
Lack of Customer-Channel Fit
The customer-channel fit refers to the extent to which a business can successfully reach its target customers through the use of marketing channels. A company that heavily invests in one channel might be at risk of market saturation. Paid media channels are saturated, and competition is high, resulting in a higher cost per click than ever before. Marketers should invest in channels that match the customers’ needs and preferences. Invest in alternative marketing channels like content marketing, email marketing, social media advertising, etc. Using different marketing channels diversifies your marketing portfolio, thereby improving ROI and allowing you to reach more customers than you could with paid ads alone. Marketers should be able to identify which channels are the best for their target market.
Poor Customer-Offer Fit
Customers are not always looking for what you have. They may be interested in a specific solution, but not the service or product that you offer. This is why companies need to think about the customer-offer fit. Ensure that your customers fully understand your offer before driving them to the bottom of your funnel. Without the knowledge of your offer, customers cannot make a purchase decision. The bottom of the funnel is highly competitive, for paid media channels the competition can easily drive up the cost per click. You need to make sure that you are driving traffic to your offers and that they are aware of what you have available before they get too far down your funnel.