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How to lower your Customer Acquisition cost?

Acquiring new customers is tough, keeping them is even harder. So for today, we will be exploring what’s your cost of a new customer and how you can improve on what you are doing. Eventually lowering your customer acquisition costs.


So firstly, how do you calculate your cost of a new customer?

Cost of Marketing


Number of new customers


Marketing spend:            $500

New Customers:              50

Cost per customer:         $10


But is this truly your cost per customer from your marketing campaign?


Did these new customers come because of your marketing efforts or simply walk-ins?


If only 10 customers come because of your marketing efforts, your cost of marketing shoots up 5 folds to $50 per customer. If only 1 customer came because of your marketing efforts, then it costs $500 per customer.

This example shows the importance of data in your marketing campaigns. If you don’t track, you will never really know for sure whether what you’re doing is worth it.


Now that we understand the importance of data, cost of new customers is still to general especially when you are running multiple campaigns. Here are 3 other simple metrics to help you further evaluate.

1. Cost per View / Reach

Cost per view is the costs of getting your advertisement in front of an audience. For online channels, it is usually reported via the channels you advertise with E.g. Facebook, Google, etc.

Advertising Costs


Number of Views

For reach, naturally most people will want to reach as many people as possible. However that will work only if your product and service is really applicable for everyone. These day marketers aim for targeted reach.


For example if your products or services is meant for Females, 16 to 30 years old. You target your Ads only to people that fall into this range. Overall, this will lead to lower cost per lead and conversion because you are not wasting your money advertising to guys or others outside your age range.

2. Cost per Lead

Cost per lead is the cost of getting a successful enquiry through your advertisements. Enquiry can come in the form of a call to you, an online form submission, etc.

Advertising Costs


Number of Leads

Depending on your industry, if you are having a high cost per lead, you will need to look into improving your advertisement copy, design or offer. Most likely it’s not attractive enough to entice a potential customer to make an enquiry.


Advertising creatives are very important if you wish to lower the cost of your marketing. Paired with a well designed viral idea, you could potentially be getting a lot of free publicity through the hypes and trends.

3. Conversion

Conversion is the percentage of successful sale from the leads you get. For online merchants, customers can make a purchase online. For offline merchants, customers will have to come down to make a purchase. So typically, offline conversion is harder than online conversion.

Number of Successful Sales


Number of Leads

If you’re having a decent amount of leads coming in but your conversion is low, then you’ll need to work on your closing with the customer or improve your products and services. Maybe the pricing is too high, or the product or service doesn’t really suit the customer, or maybe your staff didn’t do a good job selling your products and services.


For this you will really need to look into the sales process of your business to find the problem, especially for offline businesses. It’s marketing’s job to bring in leads, but it’s your sales job to close the sale. There’s no point to bring in quality leads when the bottleneck is at your sales.

To Conclude

Most small businesses tend to give up too early when they get subpar results for their marketing campaigns. They either blame the channel, system or agency running the campaigns without considering all other factors that are affecting the outcome of the campaign.


Marketing is an investment and a learning journey for every business. Success doesn’t happen overnight, so you’ll need to continually review and improve your campaigns over time for better results. Try to give your vendors some time to improve before cutting them off, if not your new vendors will have to start over with the learning curve again.


Lastly before you start marketing, also do consider if your branding is ready to compete with your competitors. Branding is also another aspect that most small businesses don’t invest enough in for their businesses.


We will be covering how much you need to invest in branding for our next article, so stay tuned.

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Everything expressed in this article is my personal opinion and might not be applicable for all businesses. Please share with us your ideas and thoughts too so we can grow & learn together!


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