Running a DTC eCommerce business is an investment. A considerable part of a brand’s resource goes into driving traffic and convincing prospects into becoming customers. All of that contributes to raising CAC (customer acquisition cost).
The higher the CAC, the less profitable the business. That’s why many brands strive to lower CAC while maintaining revenue. But how do you reduce CAC and boost your bottom line?
The first step to dealing with the problem is knowing your true CAC. It’s not just marketing spend that goes into the calculation of CAC. Employee salaries, overhead, paid marketing, tools, and anything else relevant to your company all factor into calculating CAC.
You can only develop a plan for decreasing CAC once you have an accurate cost. An ideal CAC is something much lower than the CLV (customer lifetime value). For example, a CLV to CAC ratio of 5:1 is excellent.
Uncover ways to leverage marketing automation to decrease CAC.
Discover how to increase the number of new customers acquired with the same spend.
CAC has a significant and direct impact on your revenue. Isolating the fastest ways to reduce CAC will ultimately increase your profits.
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