When brands vigorously compete for social media likes and shares, and even want patrons to subscribe to their business pages, you need to understand the streamlined processes involved in getting started. Hitting the blind spot does not always turn out lucky. Knowing the process helps you consistently drive follows, likes, shares, and, subscribes.
Startup entrepreneurs usually prefer working with vibrant social media teams, as it is the social media team that creates organic creatives, chooses the right set of strategies, and provides you with insights that would work with social media and those that do not work at all.
Whether you work with an intern who has an MBA degree with a specialization in social media or you work with a highly experienced social media strategist, this is a field that is dynamic and is evolving all the time, and you cannot undermine the value a good social media strategist brings to the table.
In this blog, let us take an in-depth overview of what customer acquisition cost (CAC) is. We will also be deep-diving into some of the best CAC reduction strategies that work in favor of your social media handles.
Alongside this, we will also be touching upon how customer acquisition cost optimization adds value to the business or brand. Helping you get started right away:
How Does Meta Work?
Here, you look for prospect leads who have shown genuine interest in buying your products or subscribing to services offered by your company as such.
Let us look into the categories of customers Meta ads usually cover:
- Click-ad customers accidentally click on Meta ads and, when contacted, do not show interest in buying or signing up for your company.
- Landing page customers look at the landing page of your website and leave before exploring the products.
- When you filter out both of these categories, you find the cream of leads that convert into prospects and can ultimately turn into customers and even become repeat customers, elevating the value of your brand. This category is ‘Interested People.’
These leads have genuinely browsed your site and explored your products and now want info on pricing, color, or design for a manufactured product. Or they are genuinely interested in buying your products or subscribing to your services at a packaged discount or attractive deal.
When you filter out these leads, you can have them sign Google forms or online forms, leaving their contact details like telephone number, email ID, and their preferred time for you to contact them to further brief them about the products or services you promote via your brand.
What is Cost Per Lead or CPL: Concept Explained
Having touched upon the lead generation part, comes the next important part of this online segment: We now talk about cost per lead, or CPL.
What is cost per lead, or CPL? Cost per lead is the cost of generating a single customer lead who can provide sales to the business entity. It is a metric that is calculated by dividing the total amount that is allocated for social media lead generation by the total number of leads you generate for genuine inquiries or customers.
Let us see this with a numerical example:
A: Total amount that is allocated for lead generation in a month=INR 30,000.
B: Total number of genuine leads you acquire through your social media marketing efforts = 300 for the month.
C: CPL = 30,000/300
D: You spend INR 100 to generate one customer lead for your product or service.
What Happens Further: Getting To Understand The Know-How
Here is a rundown of follow-up steps that happen after you calculate the CPL. Let us have an overview of the same:
1. Telemarketing Teams Connect:
Once the CPL is thoroughly calculated, you accumulate the leads and ask your social media marketing team to create an Excel Sheet mentioning the name of the customer, email ID, telephone numbers, or addresses if required. The telemarketing teams contact customers based on this database.
2. Email Teams Share Marketing Brochures Or Flyers:
To make the sales prospects even better, the email teams start sending online brochures and flyers to these members. Discount codes are shared with leads to tempt them further into closing sales orders.
3. Pitching Showroom Invites:
Once the leads turn into prospects, they are treated as selling magnets. If you run a showroom or physical store, you can invite leads to visit your showroom or branch. The leads get a physical glimpse of the products or services you deal with.
For instance, if it is a real estate firm, you can invite a group of leads over for a high tea meet to discuss property deals with them.
4. Pitching in Sales And Closing Orders:
This is the final stage of the sales funnel wherein genuinely interested leads come forward and buy products from your store and close sales orders.
What Is Customer Acquisition Cost or CAC: Concept Explained
Customer Acquisition Cost, or CAC, is the cost of acquiring a single customer with your marketing efforts. Let us take the same example as mentioned above:
A: Cost per lead or CPL = 100.
B: Total Amount Generated For Social Media Marketing = INR 30,000 per month.
C: Total number of sales orders you closed because of your efforts = 15.
D: CAC = 30,000/15 = 2000.
You spend 2000 for acquiring every customer, which is denoted as the customer acquisition cost, or CAC.
Types of Leads You Expect From Social Media Handles:
Here are the different types of leads you can expect from your social media handles. Let us have a rundown of the same:
1. Acquiring Leads:
When we looked at cost per lead, or CPL, we were talking about acquiring leads from your social media handle. Be it Facebook or Instagram.
2. Conversion Leads:
When we looked at cost per acquisition, or CAC, we were talking about the cost you spend on generating genuine leads who convert into real-time customers. Hence, CAC is a direct metric for conversion leads.
3. Junk Leads:
Junk leads refer to click-on-ad web users or website landing users who barely want to buy but just clicked the site accidentally or by mistake. Out of the total leads generated by Meta, about 50-60% remain junk leads.
4. Enquiry Leads:
Enquiry leads are web users who inquire about the price or features of a product or service you aim to promote through your brand. You can make them your prospects and close sales deals.
5. R & R Leads:
“R&R” refers to ringing but not responding. These leads constitute junk leads.
6. Future Conversion Leads:
Sometimes, the leads may genuinely be interested in your products or services but may not be in a position to close sales orders with you. These leads are future conversion leads who can be contacted later.
On average, 60% of leads tracked by Meta on Facebook or Instagram are junk leads, 20% belong to enquiry leads, 10% are conversions, and the remaining 10% belong to future conversion leads.
Best CAC Reduction Strategies For Your Social Media Handles:
It is important that you maintain an optimal customer acquisition cost, or CAC, to be able to clock in your profits consistently.
We have seen the technicalities of how CAC evolves and operates in social media campaigns. We have also discussed the surrounding terminology like CPL, lead generation, and more.
Let us dive a little further to help you understand some of the best customer cost acquisition or CAC reduction strategies to optimize the cost of marketing and to increase sales turnover.
Helping you through a rundown of the same:
1. Setting Up An Achievable Benchmark:
When you deal with Customer Acquisition Cost (CAC), it is important that you set the benchmark or work the math beforehand. This way, you can produce leads within your social media budget and optimize these leads to leave you with better conversion rates.
2. Leverage Your Social Media Strategy:
Here, you can work on optimizing your social media strategies to achieve reduced CACs through marketing efforts. Providing you with simple guidelines for the same:
- Convert long blog posts into effective carousels.
- Optimize your blogs with visually impactful pictures.
- Use captivating hooks for your social media creatives.
3. Optimizing Your Sales Funnel Data:
It is rare that a group of leads who sign up through a form and reach your website landing page will jump at the idea of buying your products or services. You must consistently follow up with leads.
Let us look at simple guidelines on how customer acquisition cost optimization is done effectively.
- Segregate the leads into junk leads, consumer enquiries, or interested leads so that you can target customers lead-wise.
- Boost previous posts with revamped carousels or enhanced images.
- Add creative slogans to impress your social media audiences
- Create relatability or purpose value to your existing creatives or posts so that your social media audiences resonate with your product offerings.
Case Studies And Success Stories From AimGlobal Digital:
At AimGlobal Digital, we pride ourselves on catering to 60-plus clients in the hotel, hospitality, automobile, education, real estate, and beauty industries. With respect to CAC, let us share a success story of our esteemed client. Stay tuned.
Blue Hyundai:
By optimizing social media creatives and posting the right captions on posters, we were able to optimize customer acquisition cost and generate more sales orders as our leads visited the showroom of Blue Hyundai to buy brand-new cars. The sales turnover improved tremendously, and the brand owner was quite happy with the team at AimGlobal Digital.
Frequently Asked Questions or FAQs:
1. Why is cost per lead calculated first?
A. The cost per lead, or the CPL, is calculated to find out the total number of leads that are generated from the allocated cost a brand is ready to spend on its social media marketing efforts. We further need this data to segregate leads into junk, ringing but not responding, and genuinely interested leads. This is how sales funnels are created at every stage of marketing.
2. What does a brand achieve with optimized CAC?
A. With an optimized customer acquisition cost or CAC, the brand emerges as a brand leader as marketing teams make their best efforts to turn potential leads into customers and improve their sales turnover.
3. Is social media marketing more effective than traditional digital marketing efforts?
A. Yes, marketing via social media provides brand awareness and visibility, as more than 2 billion web users browse Facebook or Instagram every single day.
This wide consumer base allows visibility and establishes the brand as an authority if it is able to showcase its products or services via social media, as compared to adopting traditional methods of digital marketing.
