Successful marketers use market research to make better business decisions, maintain their company’s competitive edge, and remain on top of events. If one is beginning a company or extending an existing one, research is essential for identifying the target audiences and growing revenue.
How can Market Research help in reducing your customer acquisition costs?
The term customer acquisition cost or CAC refers to the sales and marketing expenses paid while obtaining a customer. And lowering this expense is a never-ending mission for any company that wants to stay afloat and generate sales.
Customers pay for a product/service from a company because:
- The customer has a dilemma that they would like to be solved by someone else.
- The consumer trusts that the approach would provide them with more benefits than they pay for.
If the company can solve the problem, rivals will almost definitely be able to do so as well. In that case, the company must differentiate from the competitors in terms of offers/discounts. This is where Market Research comes into picture
It is important to understand the company’s customer base and about their wants and needs. By doing this, the way of lowering CAC can be determined. Companies can concentrate on who needs the goods and will be able to buy from the company, by filtering out all the customers who are not interested in the company’s products.
The best way to do this is through customer research surveys to reach out to the customers. Market research can help companies to figure who they need to cater to and what they need to do to keep customers coming back.
- Begin with the end goal.
Before starting, it is important to understand the end goal that must be achieved while understanding the customers. Otherwise, simply collecting the data will not bring upon any action to affect the Customer acquisition cost. Start by thinking of the goals the company wants to achieve to reduce the CAC. For example, a company can go by understanding the brand positioning, optimizing the price, or refinement in messaging.
For example, If a company guesses the price of their goods, they will lose consumers because the price is lower than anticipated.
2. Asking the right questions
Companies must inform customers about their previous or present experiences to obtain reliable data to enhance CAC.Companies will never know that the customer will do what they promise if they ask for the future. Nobody can tell what will happen in the future. As a result, if a business asks a customer a future-focused question, there is a higher risk that the company will act on poor data, and what the customer tells the company will never happen.
For example, in the case of price optimization, it might be best to use some of the existing methods such as The Van Westendorp approach can be used to determine your customers’ ability to pay selection ( inexpensive, expensive, too cheap, too expensive).
3. Analyse the data collected from customers.
Once the data is collected, it should be analysed by experts in the field using different statistical approaches to gain business insights out of it. For example, in the case of price optimization, it best to use a price sensitivity analysis.
Such a statistical processing gives them invaluable insights on the the most optimal pricing strategy
4. Optimization of marketing:
Once the company has completed its data analysis, it is time to bring these insights into action. For the above example about price optimization, once the optimum pricing range is obtained from the price sensitivity analysis, taking actions from the results will help in creating a customer-first approach for the company’s marketing strategy and in turn help in reducing the customer acquisition cost.
We at Consulsat are committed to help organizations to uncover viable strategies to drive business growth. Talk to our consultants today on how to strategise your marketing efforts.