The Cost Of Catching Customers: What It Takes To Realize Acquisition ROI

Standard direct-marketing wisdom holds that brands focus on customer retention during challenging times and shift into acquisition when things are better. 

If that’s the case, then we are in an economic boom, judging by The State of Customer Messaging in 2023, a study by OneSignal. 

The companies polled are allocating these resources (i.e., headcount, budget, contractors, etc.):  

  • Move towards customer acquisition — 42.9%
  • Equal amount towards both — 28.6%
  • Move toward customer retention — 28.5%

But they face several hurdles, including customer acquisition costs, which are calculated by dividing the total marketing and sales expenses by the number of new customer acquired. 

For instance, if your total marketing and sales expenses over a quarter were $50,000, and you acquired 200 news customers during the period, the CAC would be $250. 

This varies by industry. Here is the current CAC for each:

  • Technology (Software) — $395
  • Telecom — $315
  • Banking/Insurance — $303
  • Real Estate — $213
  • Technology (Hardware) — $182
  • Financial — $175
  • Marketing Agency — $141
  • Transportation — $98
  • Manufacturing--$83
  • Consumer Goods — $22
  • Retail — $10
  • Travel — $7

Companies reduced their marketing/product spending and focused more on improving ROI during the recent downturn:

  • Strongly agree — 43.1%
  • Somewhat agree — 38.4%
  • Somewhat disagree — 13.5%
  • Strongly disagree — 5%

Meanwhile broader economic changes have caused firms to adopt their marketing and engagement strategy in 2023:

  • Strongly agree — 43.1%
  • Somewhat agree — 44.5%
  • Somewhat disagree — 10%
  • Strongly disagree — 2.4%

Moreover, 82% have reduced their marketing and product spending to improve their ROI. 

The study argues that if CAC is high, then lifetime value (LTC) must also be high. This requires calculating the LTV/CAC ratio. 

If the LTV is, say, $850 and the CAC is $400, the ratio would be 2.1.

The study cites three ways of calculating LTV:

  1. Average monthly revenue per customer x average customer lifetime in months
  2. Average monthly revenue per customer/average monthly churn
  3. Average order value x number of repeat sales x average retention time in months

All that said, 71.1% of the respondents say retention will become more important and 13.4% that it will be about the same. 

Meanwhile, here’s some free advice on the email front. Firms that send personalized abandoned car emails need to track the following data:

  • When a customer has added something to their shopping cart 
  • How much time has elapsed since they added the items 
  • Whether or not they completed their purchase 
  • What items they added 
  • Their name 
  • Their email address.

OneSignal surveyed more than 1,000 product and marketing professionals and C-suite executives.  

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