B2B Customer Acquisition Cost Killing You? Try These 7 Tips

They say you’ve got to spend money to make money. But even “they” can’t possibly approve of flushing money down the drain all in the name of a few quick sales.

The average business spends nearly 12% of its total revenue on digital marketing alone, according to a 2021 report. Combine that with trade shows and other offline marketing and sales efforts, and that’s a lot of investment. For small and medium-sized B2Bs, balancing your per-customer spending with your customers’ average lifetime value can make or break your growth.

We’ll show you seven tricks to reducing customer acquisition cost (CAC). All seven are surprisingly attainable if you have the talent available to execute them! 

But First: A Quick Review on How to Calculate Customer Acquisition Cost

(Already a master of interpreting customer-value data? Skip ahead a section, or even two sections if you’re really excited about those seven tips.)

To know whether you’ve got a CAC problem, you’ve got to learn the math.

Start by selecting the specific campaign or length of time you want to audit for ROI. From there, break out your calculator and tally the sales/marketing costs associated with that time frame.

A B2B customer acquisition cost formula typically accounts for:

1. Overhead costs for internal and external sales & marketing employees (including taxes, benefits, etc.)
2. Sales & marketing software costs (i.e. CRM, automation platforms)
3. Advertising costs

After totaling those costs, divide them by the number of customers you earned during that period. There’s your average customer acquisition expense!

Of course, this number isn’t a great indicator of anything unless you add context. So remember to compare it with your average customer lifetime revenue. Once you subtract the cost from the revenue, you have your true customer lifetime value.

Benchmarks for B2B customer lifetime value vary by industry. As one example, lifetime value should outweigh customer acquisition cost for SaaS companies by a 3:1 ratio, experts say. Your mileage may differ.

Other Signs Your B2B Customer Acquisition Cost Is Out of Control

If you’re not sure you’re investing your marketing dollars wisely, check your lead generation stats. Then look around you. 

Here are a few B2B industry examples of average spend per lead:

(Data from an awesome article by Flying Saucer Studio)

Below, you’ll see that B2Bs are the biggest spenders when it comes to conferences, trade shows, and the like – $811 per lead. Now compare that to search engines -- which they use to the tune of $31 per customer.

The average costs of these channels can vary wildly, but so can their conversion rate -- in other words, your ROI. A B2B software marketing campaign that relies heavily on trade shows or traditional advertising is fine if it brings home a 45% conversion rate and $15,000 per converted lead. But that’s often not the case.

If your traffic and leads aren’t turning into customers, you may need to rethink your marketing strategy before you continue investing.

7 Ways to Improve B2B Customer Acquisition Costs

And finally some good news! There are plenty of ways to tweak your sales and marketing approaches to earn more customers with less investment. Here are seven of our favorites:

1. Current-customer delight
2. Content writing
3. Email
4. ABM
5. LinkedIn
6. Video(!?)
7. A better buyer persona
   
   

1. Love the One You’ve Got (Customer Delight)

Stew on that number for the average per-lead investment in trade shows a bit longer. What if you didn’t have to rely so much on plane trips and fancy dinners to generate new leads?

Perhaps you’re familiar with the three-stage concept of the customer journey:

• Attract
• Convert
• Close

It’s astonishing how many companies flat-out ignore the fourth and final stage of the sales and marketing process: Delight.

If you’ve got a high churn rate, you might want to focus less on B2B lead generation and more on customer retention.

• Are you providing sufficient post-sale tech support, training, etc.?
• Are your sellers checking up on existing customers’ needs where there may be an upsell opportunity? 
• Are you making sure closed customers see your educational newsletters, new product announcements, and other helpful info that keeps your brand top-of-mind?

By keeping customers happy during and after the sale, you’re most likely to score high reviews and even testimonial opportunities.

A simple, genuine testimonial with a name and a face on it can do wonders for your online lead generation. Prospects are more likely to trust a recommendation from a trustworthy-looking peer than they are from your own mouth. Consider adding a referral program too, as these can benefit both sides -- you get more leads; they get a Home Depot gift card.

2. Content Writing

We mentioned cross-country trips and in-person courting.

Most B2B and manufacturing decision makers love ‘em. The idea of meeting face-to-face and building a long-term partnership elicits a warm, fuzzy feeling.

But that’s not the only way to reach a customer -- especially after COVID forced a permanent shift to largely online-based window shopping. Yes, even for B2Bs with niche products.

In 2020, about 80% of the B2B customer journey took place online. COVID-related or not, that number ain’t going back -- the pin is out of the proverbial grenade.

In the chart above, you saw that “content marketing” had a solid per-lead cost. But other entries on that list -- including SEO (search engine optimization) -- also fall under the umbrella of “content marketing.” And they all have amazing numbers compared with trade shows, traditional ads, and the like.

To sum it up: SEO-focused content writing might be the thriftiest lead generation strategy on Earth. (For the record, content writing includes blogging, website page copywriting, and other surprises we’ll cover later.) 

What makes blogging and copywriting so cheap? The answer is well-executed SEO. When your page includes the right keywords and expertly educates the reader, search engines like Google will rank it higher. And a page’s success tends to compound over time -- nearly half of marketers say 61-80% of their non-paid website traffic comes from “old” blog posts.

Notably, SaaS and technology are cited as two of the B2B industries that see the most success with content marketing. But we’ve witnessed content marketing success firsthand for B2Bs in manufacturing, architecture, hospitality/design, healthcare, and other industries.

3. Sales & Marketing Emails

Easy and cheap to do en masse, email marketing is somehow underappreciated after all these decades.

Seriously -- the ROI of email marketing remains ridiculously high. We’re talking $42 for every $1 spent.

We owe part of that value to email being a perfect match for automation, which is doubly awesome for lowering labor costs. Did you know automation is among the top three tactics email marketers use today to improve performance?

Examples of B2B email marketing and sales efforts include:

• Biweekly newsletters with educational, helpful articles
• Follow-up lead nurturing after someone downloads a whitepaper or e-book
• 1:1 “thanks for your time” messages with a personalized video from the salesperson
  
  

4. ABM

ABM, or account-based marketing, is a blend of inbound and outbound marketing in the best way possible.

For the uninitiated, ABM is a highly focused B2B marketing tactic in which marketing and sales teams collaborate to target a handful of best-fit “dream accounts.”

The first step of any ABM strategy is to identify the market and customer type that gives you the highest chance for a sale. (See #7 on our list.) It’s a little more research up front, but overall it costs less to close good-fit customers. They’re more likely to invest more in your offerings, and they’re a more likely source of repeat business (assuming your research led you to the correct assumptions).

Because you’re not wasting time and attention on the wrong audience, ABM can even shorten the sales cycle. This brings the cost of the sale down even further. 

One final note on efficiency. Just like email marketing, ABM can lean heavily on automation tools, as well as pre-existing content (i.e. blog posts and whitepapers) to attract attention. And the new “big-fish” account you just landed will never know you used recycled bait.

5. LinkedIn

If Facebook is for grannies and Instagram is for college kids, then LinkedIn is for the in-between professional.

Just about any B2B social media strategy can benefit from a focus on LinkedIn. This platform, after all, is where business people go to network with serious pros just like them. Perhaps best of all, B2B LinkedIn marketing works from both a paid and an organic perspective.

Yes, the ads may seem a bit pricey up-front, even if your deal sizes tend to be large. Just remember the long-term benefits of being able to engage and target decision makers based on:

• Job role
• Industry
• Company name
• More

LinkedIn ads statistically yield high-quality leads for nearly every niche imaginable, making them ideal for B2B digital marketing strategies. 

Organic (non-paid) social media efforts are also a no-brainer marriage between B2Bs and LinkedIn. You can post educational content on your feed and contribute meaningful comments and resources in LinkedIn Groups. There are always exceptions, but this is usually more effective than casting a wider net on Facebook or navigating the selfie-infested depths of Instagram.

6. (Cheap) Video

Bet you didn’t expect to see video on this list!

Producing valuable video content doesn’t mean you need to hire Steven Spielberg (or Steven Seagal for that matter, although he’s probably available for cheap). Most B2B video marketing only requires a good smartphone and a company smartypants who isn’t camera-shy. If your entire company is allergic to being on camera, you can still showcase products and your manufacturing capabilities -- or get one of your testimonials on-screen!

Production values do matter for certain videos, like product demos or facility tours, so you’ll still want to invest a little in equipment and talent. But if you’re going fully Hollywood for every 10-second Twitter post -- or not doing video marketing at all -- either way you’re probably not optimizing your CAC.

7. Build a Better Buyer Persona

Last, but light years away from least, we have the all-important buyer persona.

Also called a customer profile, a buyer persona is a semi-fictitous representation of your ideal customers -- the ones you wish you could clone 100x. A great buyer persona includes, among many other traits:

• Demographics
• Pain points
• Concerns about each possible solution
• Search terms used to discover your site (or a competitor’s)
• Online habits (mobile vs. desktop, preferred social platforms, etc.)

If it isn’t already, your buyer persona should be the shining centerpiece of your sales and marketing campaigns. Both departments, along with Customer Service, should have input so you’re not passing off bad leads or unsatisfied customers to one another. Happy handoffs = smoother sales funnels and less wasted effort on high-CAC channels.

To continue collecting that sweet, sweet ROI, optimize your buyer persona as you discover new trends among your best buyers.

How to Assess Your Spending

“Spending money to make money” is only valuable to a point. And that cliff is a steep one -- so plan carefully where each and every marketing and sale dollar goes.

To learn more about the state of your B2B marketing ROI, start with your current content. We recommend a marketing assessment, which you can get for free here: