How to Decrease CAC Using AI: the Ultimate Guide by Signum.AI
July 27, 2021 12 min. read
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No surprise, acquiring new customers and minimizing the cost of this process has always been the top priority for any business. In post-pandemic reality, it’s becoming more crucial, and companies are searching for time-saving and cost-effective ways to expand and retain their client base.
Here comes the AI. With data and automation at hand, the sales cycle can speed up, winning new customers gets easier, and existing customers can be upsold to faster. Thus customer acquisition cost (CAC) decreases.
But let’s get more into details and find out how exactly AI helps decrease CAC.
First Things First: Before Reducing — Calculate
Basically, CAC is the cost of all actions performed by a company to get a new customer. And it’s evident that to measure and reduce it, you need to calculate it first. This is where data steps in.
You need to record all your expenses carefully: marketing budgets, the salary of your sales and marketing teams, etc. if you want to know how to calculate CAC in more detail, check out our article about key marketing KPIs.
And only as soon as you have your CAC number in dollars can you start playing around with various strategies to reduce it. The good thing is there are heaps of ways to do it. But keep in mind that the more customers you want, the more financial resources you should put into your marketing and sales initiatives. Unless you implement AI-driven tools. ?
How to Reduce CAC with AI?
Increase the Accuracy of Targeting
Targeting is awesome, but in order to obtain the best clients for your business strategy, your sights have to be set on the right target. Are you wondering how to do that? Here’s how — AI and, specifically, entity embedding. When this method is used, deep learning algorithms of an AI-based tool, having a considerable amount of data, can understand and leverage its patterns.
What is Entity Embedding?
Roughly speaking, entity embedding is a vector representation of a particular characteristic of something. It can be a word or a sentence, a context or an idea of a thing. In our case, when this method is used for targeting, the entity is content that is engaging for our target audience. Let’s get into more detail.
The entity embedding method is used when the specific profile of the audience is vague or broad—e.g., housewives or homeowners. However, the audience can still be consolidated by interest or social occupation, for example. When segments cannot be clearly defined, it is extremely difficult to find desired audiences.
In this case, content that these potential audiences like and react positively to is taken as a basis. Then this content is input into the system, and the system parses the available data and compares it to similar or matching content. The final step is to get these target audiences from the influencers whose content they liked. And AI-driven tools can do it in no time and, most importantly, using legal data.
Entity embedding is only one of the methods available using AI technology. In most cases, your target audience can be obtained from a variety of sources. Such as…
Influencers or Media
Suppose the target audience is very specific and can be easily segmented. In that case, all that is needed is an influencer or media source whose content is related to the target segment. For example, if we are looking for marketing professionals, we need to find media or thought leaders who share content about marketing. But how do you get those contacts? Manually?
No way! AI-based tools will do all the homework for you. It is now possible to communicate with selected profiles (influencers) to monetize their audience (they usually have a base of their subscribers, for example, from email newsletters, etc.). Typically, they do not sell contacts but create custom Facebook audiences where all the customer data stays protected and anonymous and share that cluster with us.
Either way, instead of launching hundreds of online marketing campaigns for every internet user, by targeting a hyper-relevant audience that is the most interested in your product, you hit the bull’s eye with the first shot.
Personalize Your Offer
We bet that you are already familiar with what a personalized offer is. But imagine the amount of time needed to manually create offers for hundreds if not thousands of clients. What a nightmare!
With AI tools at hand, you can generate offers that will accurately anticipate potential clients’ specific demands. Let’s go over this, step by step.
Step 1. AI Builds Ideal Customer Profiles
First and foremost, AI will collect and analyze vast amounts of data that people can hardly process. And thanks to such a thorough analysis, you can easily create super-accurate Ideal Customer Profiles (ICPs), describe their interests and pain points that will make it possible to present your product as if it was made specifically for them.
Step 2. AI Generates Personalized Messages
Deep personalization is becoming increasingly important now, as opposed to mass marketing. Today customers expect special attention and a very individual approach. It works like this.
Using all the data about your target audience (collected using their digital footprints), AI will create a message that will communicate a problem-solving offer. And you can include any amount of variables, such as sales triggers or personal information.
Thanks to such data-driven tools as Signum.AI, deep and detailed personalization is within reach, and as a result, accurate offers hit the target.
Generate and Customize Your Website Content
Imagine how much time and effort can be saved if your website content—subject lines, CTAs and product descriptions—could be created automatically and in such a way that users won’t be able to resist your offer. The good news is that GPT-3-powered software can do all of that.
How does it work? AI-driven algorithms collect and sort data relevant to your business on the web (such as your market data), analyze it, select the content with the highest engagement levels, and create better copy for you.
And now imagine that your website content can also be personalized for each website visitor on an individual level. That can be easily done too! Remember that the better you address the needs and wants of the visitors from the get-go, the higher the chance that they keep scrolling and stick around longer.
Great, but what can be personalized? Here’s what.
Your website’s landing pages are often your visitors’ first encounters with your product. They represent what is there for them, so it’s crucial to show them exactly what they want—more relevant and helpful information.
Take Netflix, for example. It uses AI and machine learning that analyzes all sorts of data—your viewing and search history, rating data, kind of device used and other variables to recommend TV shows and movies for you. It even chooses such specifics as the most appealing image for program titles!
And you can do the same. Based on what you know about your customers’ previous history of visits or purchases, you can recommend content or products that are most relevant to them.
But it shouldn’t stop here. AI tools also make it possible to add an extra personalized touch. For example, greeting your website user by name, by the appropriate time of the day or in their native language.
Call-to-actions (CTAs) are a proven marketing tool that encourages your prospects to do what you want them to do. If they are clearly formulated, their value is undeniable. Let your AI content generation tool find the best type of content that drives visitors to the next step quickly and easily.
CTAs can also be personalized according to the stage of your customer’s sales funnel. For example, if they visit your website for the first time, you can show them a “Request a Demo” CTA. If they are your customers already, they can be offered a “Check the Product Updates” CTA.
Nurture Customers with the Right Content
If you lose a customer, your CAC automatically increases because you need either to acquire a new one or return the one you lost. To avoid this, you not only need to have an amazing product but to remind your customers how amazing your product is. In other words, consistently nurturing them with valuable content will help them make the best advantage of it.
To be more specific, generate and send content that anticipates their general interests (industry-specific user cases), pain-points (relevant product updates and new features) and product-based difficulties (instructions and how-tos).
If you have an AI-based tool in your tech stack, this will be a no-brainer. It will segment and sort your customer lists, and based on these lists, generate desired content and send it to the groups created in any channel available.
Generate Award-Winning Content
Choosing a topic that will get better engagement can be quite challenging. And relying on your gut instinct is not the best idea. With AI-powered tools, on the contrary, all your actions will be data-driven—they will analyze your audience’s search history, suggest content that got better customer responses in the past and assist in creating it so that your copy is engaging, relevant to your audience, and has a better chance to go viral.
As you can see, reducing CAC is much easier than it seems. And with a variety of AI tools on the market, you even have an opportunity to choose from various tools. As soon as you rely on data and automate as many processes as possible, you will spend less time and money and hit the target better.
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