{"id":30871,"date":"2021-03-11T11:18:33","date_gmt":"2021-03-11T19:18:33","guid":{"rendered":"https:\/\/birdeye.com\/blog\/?p=30871"},"modified":"2024-02-02T14:49:24","modified_gmt":"2024-02-02T22:49:24","slug":"reduce-customer-acquisition-cost-with-sms-marketing","status":"publish","type":"post","link":"https:\/\/birdeye.com\/blog\/reduce-customer-acquisition-cost-with-sms-marketing\/","title":{"rendered":"How to reduce customer acquisition cost (CAC) with business text messaging"},"content":{"rendered":"\n<p>Customer acquisition cost (CAC) has increased by <a href=\"https:\/\/www.profitwell.com\/recur\/all\/how-is-cac-changing-over-time\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">60%<\/a> in just six years.<\/p>\n\n\n\n<p>Consumers are spending more time online with increasingly high expectations. This makes competing for conversions on saturated marketing channels more costly than ever.<\/p>\n\n\n\n<p>Cultivating sustainable growth is imperative for success, and understanding how to keep your CAC low and ROI high is the foundation of sustainable growth.&nbsp;&nbsp;<\/p>\n\n\n\n<p>By the end of this blog, you\u2019ll learn how <a href=\"https:\/\/birdeye.com\/blog\/sms-marketing-how-to-collect-phone-numbers-for-opt-in\/\">SMS Marketing<\/a> is the ideal strategy to reduce your CAC while yielding significant returns.<\/p>\n\n\n\n<p>Before we dive in, it\u2019s important to understand the definition of CAC.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-customer-acquisition-cost-cac\"><strong>What is Customer Acquisition Cost (CAC)?<\/strong><\/h2>\n\n\n\n<p>Customer Acquisition Cost (CAC) is the total cost of marketing and sales to acquire a new customer. Simply put it\u2019s the cost of convincing a potential customer to buy a product or service from your business.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-to-calculate-customer-acquisition-cost-cac\"><strong>How to calculate Customer Acquisition Cost (CAC)?<\/strong><\/h2>\n\n\n\n<p>In order to lower CAC you first need to put on your mathematician hat and calculate your current customer acquisition cost. The basic CAC formula is:<\/p>\n\n\n\n<p><strong>Customer Acquisition Cost = Cost of sales + Cost of marketing \/ Number of new customers acquired.<\/strong><\/p>\n\n\n\n<p>As a marketer you should have a firm understanding of your sales and marketing costs, but just in case here are some suggestions to keep in mind:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Ad spend<\/li>\n\n\n\n<li>Employee salaries<\/li>\n\n\n\n<li>Technology costs<\/li>\n\n\n\n<li>Pay for vendors and suppliers<\/li>\n\n\n\n<li>&#8230;and the list goes on<\/li>\n<\/ul>\n\n\n\n<p>Now that you understand how to track your CAC, you can begin using effective strategies that reduce costs.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-sms-marketing-keeps-customer-acquisition-cost-low-and-roi-high\"><strong>SMS Marketing keeps Customer Acquisition Cost low and ROI high<\/strong><\/h2>\n\n\n\n<p>Did you know the average person checks their phone <a href=\"https:\/\/smallbiztrends.com\/2020\/03\/2020-mobile-phone-usage-statistics.html\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">160 times a day<\/a>? Smartphone usage has increased to exponential heights.<\/p>\n\n\n\n<p>The point is people keep their phones readily available to find information and, most importantly for the context of this article, to communicate &#8211; especially when engaging with businesses.&nbsp;<\/p>\n\n\n\n<p>Customers <strong>prefer<\/strong> texting. Very few people want to communicate with businesses via a phone call, especially if texting is an option. When it comes to winning on the battlefield of customer experience, it\u2019s important to meet your customers where they prefer and texting is where it\u2019s at.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A whopping <a href=\"https:\/\/www.twilio.com\/learn\/commerce-communications\/how-consumers-use-messaging\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">9 out of 10<\/a> consumers want to use messaging to communicate with businesses.&nbsp;<\/li>\n\n\n\n<li><a href=\"https:\/\/www.twilio.com\/learn\/commerce-communications\/how-consumers-use-messaging\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">85%<\/a> want this communication to be two-way where they are able to respond to the business using text as well.<\/li>\n<\/ul>\n\n\n\n<p>To top it all off, SMS Marketing is low cost because <strong>the only expenses associated with it involve using a <a href=\"https:\/\/birdeye.com\/blog\/what-makes-mass-text-messages-important-for-your-business\/\">text message<\/a> service<\/strong>. This makes SMS marketing an inexpensive alternative that yields great results.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Text messages have a <a href=\"https:\/\/www.textanywhere.net\/resources\/faqs\/sms-marketing\/what-is-the-average-sms-marketing-open-rate\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">98%<\/a> open rate versus just <a href=\"https:\/\/mailchimp.com\/resources\/email-marketing-benchmarks\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">21%<\/a> for email.&nbsp;<\/li>\n\n\n\n<li>The average response rate for SMS marketing is <a href=\"http:\/\/www.wordstream.com\/average-ctr\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">45%<\/a>. As a comparison, the average CTR for PPC ads is about <a href=\"https:\/\/www.wordstream.com\/average-ctr\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">2%<\/a>.<\/li>\n\n\n\n<li><a href=\"https:\/\/blog.rebrandly.com\/12-sms-text-message-marketing-statistics\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">75%<\/a> of consumers don\u2019t mind getting promotional text messages from brands.&nbsp;<\/li>\n\n\n\n<li><a href=\"https:\/\/www.smartinsights.com\/mobile-marketing\/sms-marketing\/6-benefits-sms-marketing\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">45%<\/a> of mobile marketing campaigns generate a successful ROI.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>You might be wondering what makes SMS Marketing so incredibly successful? Text messaging&#8217;s direct nature results in high click-through rates, which increases the success and conversions of other business channels. While SMS itself isn\u2019t a new channel, it\u2019s one that marketers have only recently begun to regularly use and refine.&nbsp;<\/p>\n\n\n\n<p>However, with more businesses refining their SMS Marketing strategy, it\u2019s important for your business to provide an innovative texting experience that stands out.<\/p>\n\n\n\n<p>With that in mind, here are some best practices to help you deliver text messages that boosts conversions while keeping CAC low.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-get-the-word-out-at-low-cost-with-mass-texting\"><strong>Get the word out at low cost with Mass Texting<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/birdeye.com\/mass-texting\/\">Mass texting<\/a> is an effective and cost-efficient way to send a single text message to thousands of subscribers all at once. It saves time and effort while also offering a complete analysis of the results achieved through texting.<\/p>\n\n\n\n<p>With the right solution you can send or schedule text messages to a large number of leads at once.&nbsp;<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-12@2x-1024x702.png\" alt=\"New mass text message\" class=\"wp-image-30883\" width=\"549\" height=\"376\" srcset=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-12@2x-1024x702.png 1024w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-12@2x-300x206.png 300w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-12@2x-768x527.png 768w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-12@2x-810x555.png 810w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-12@2x-145x100.png 145w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-12@2x-380x260.png 380w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-12@2x.png 1126w\" sizes=\"(max-width: 549px) 100vw, 549px\" \/><\/figure>\n<\/div>\n\n\n<p>Considering the incredible metrics SMS Marketing generates, it\u2019s worth investing in mass texting rather than throwing more spend towards display advertising. Given that consumers only see half of the 1700 ads they\u2019re bombarded with per month due to ad blockers, mass texting quickly becomes the more cost-effective channel to reduce CAC while improving engagement.&nbsp;<\/p>\n\n\n\n<p><strong>Pro tip:<\/strong> Your leads need to have opted-in to receive texts from your company in order to be compliant with <a href=\"https:\/\/docs.fcc.gov\/public\/attachments\/DA-16-1299A1.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">TCPA<\/a> guidelines. Additionally, make sure that your text messages have an <a href=\"https:\/\/birdeye.com\/blog\/sms-marketing-how-to-collect-phone-numbers-for-opt-in\/\">opt-out<\/a> that allows consumers to unsubscribe from your messages. Not doing this is a violation of FCC regulations.&nbsp;<\/p>\n\n\n\n<p>Additionally, mass texting enables you to handle responses from one centralized place. Remember, <a href=\"https:\/\/www.twilio.com\/learn\/commerce-communications\/how-consumers-use-messaging\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">85%<\/a> of consumers want two-way texting where they can respond to businesses.&nbsp;<\/p>\n\n\n\n<p><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-20@2x-1024x747.jpg\" alt=\"Customer interaction\" class=\"wp-image-30884\" width=\"537\" height=\"392\" srcset=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-20@2x-1024x747.jpg 1024w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-20@2x-300x219.jpg 300w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-20@2x-768x560.jpg 768w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-20@2x-810x591.jpg 810w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/group-20@2x.jpg 1110w\" sizes=\"(max-width: 537px) 100vw, 537px\" \/><\/figure>\n<\/div>\n\n\n<p>Seamlessly turning <a href=\"https:\/\/birdeye.com\/mass-texting\/\">mass messaging<\/a> into one-to-one chats with prospects will provide a unique experience that helps your business stand out from the competition.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-personalize-messages-for-every-occasion\"><strong>Personalize messages for every occasion<\/strong><\/h2>\n\n\n\n<p>By sending personalized business text messages your brand will cultivate more emotional connections with your target audience. In fact, <a href=\"https:\/\/www.yotpo.com\/resources\/survey-consumers-want-texts\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">54%<\/a> of consumers are more likely to make a purchase if the messages they receive are personalized.&nbsp;<\/p>\n\n\n\n<p>However, this is only possible if you\u2019re able to create these high-converting, and highly personal, messages at scale. SMS marketing enables your business to easily send texts to multiple people at once using personalized text templates for all locations.&nbsp;<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Text-offers-1024x673.png\" alt=\"Text templates\" class=\"wp-image-30886\" width=\"593\" height=\"390\" srcset=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Text-offers-1024x673.png 1024w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Text-offers-300x197.png 300w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Text-offers-768x505.png 768w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Text-offers-810x532.png 810w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Text-offers.png 1126w\" sizes=\"(max-width: 593px) 100vw, 593px\" \/><\/figure>\n<\/div>\n\n\n<p>Quickly text 10 or 10,000 contacts and engage your customers at scale on this low cost, high performing channel.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-boost-conversions-through-sms-promotions\"><strong>Boost conversions through SMS promotions<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/99firms.com\/blog\/sms-marketing-stats\/#gref\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">85%<\/a> of customers tend to use discount offers sent via text within a week of receiving it. On the contrary, discount offers sent via email are redeemed by only 0.5% &#8211; 2% of consumers.<\/p>\n\n\n\n<p>Pricing based offers such as buy-one-get-one offers are the most preferred amongst consumers. Time-sensitive SMS campaigns focused on flash sales, holiday special sales, and sales expiration reminders are also found to be effective.<\/p>\n\n\n\n<p><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img decoding=\"async\" src=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Mobile-text-offer.jpg\" alt=\"Text offer\" class=\"wp-image-30887\" width=\"259\" height=\"533\" srcset=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Mobile-text-offer.jpg 351w, https:\/\/birdeye.com\/blog\/wp-content\/uploads\/Mobile-text-offer-146x300.jpg 146w\" sizes=\"(max-width: 259px) 100vw, 259px\" \/><\/figure>\n<\/div>\n\n\n<p>Besides these, location-based offers and product-based offers are some other ways to trigger actions and generate leads.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-use-sms-marketing-to-get-more-referrals\"><strong>Use SMS Marketing to get more referrals<\/strong><\/h2>\n\n\n\n<p>Referral requests are typically sent through email. However, despite more people communicating online in 2020 the average email open rate dropped by <a href=\"https:\/\/www.superoffice.com\/blog\/email-open-rates\/#:~:text=Until%202019%2C%20that%20is.,slight%20decrease%20compared%20to%202019).\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">3%<\/a>. Meanwhile <a href=\"https:\/\/www.smscomparison.com\/mass-text-messaging\/2022-statistics\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">48.7 million<\/a> people opted to use business text messaging services in the same year, making it one of the most rapidly growing marketing channels.<gwmw style=\"display:none;\"><\/p>\n\n\n\n<p>If you want to boost engagement for your referral requests business texting is the route to go. Not only will it keep your CAC low, but it will generate <em>much<\/em> better open rates than <a href=\"https:\/\/birdeye.com\/blog\/referral-marketing\/\">referral<\/a> requests sent through email.&nbsp;<\/p>\n\n\n\n<p>With the right platform fueling your SMS marketing you can make it easy to send out referral requests at scale with a link to your business included in the message.&nbsp;<\/p>\n\n\n\n<p>\u201cOur new patient numbers have continued to grow due to the ability to communicate with prospective clients via SMS 24\/7, and also due to automated referrals requests sent to existing clients. This allows happy clients to recommend us to their friends and family via sms.\u201d<\/p>\n\n\n\n<p><strong>Adam Thorne &#8211; Harley Street Dental Studio<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-learn-how-birdeye-can-help-you-get-started-with-sms-marketing\"><strong>Learn how Birdeye can help you get started with SMS Marketing<\/strong><\/h2>\n\n\n\n<p><a href=\"https:\/\/birdeye.com\/blog\/customer-messaging\/\">Text Messaging<\/a> is one of the most cost-effective customer interaction tools for today\u2019s businesses, and if you\u2019re not taking advantage of its many benefits you are most definitely missing out. Birdeye\u2019s all-in-one Experience Marketing platform helps biggest global brands of all sizes reap the many benefits of SMS Marketing.&nbsp;<gwmw style=\"display:none;\"><gwmw style=\"display:none;\"><\/gwmw><\/gwmw><\/p>\n\n\n\n<figure class=\"wp-block-image size-large is-style-default\"><a href=\"https:\/\/birdeye.com\/resources\/guides\/state-of-sms-marketing-in-2021\/\"><img decoding=\"async\" src=\"https:\/\/birdeye.com\/blog\/wp-content\/uploads\/SMS-Marketing-guide-CTA.png\" alt=\"\" class=\"wp-image-29997\"\/><\/a><\/figure>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Customer acquisition cost (CAC) has increased by 60% in just six years. Consumers are spending more time online with increasingly high expectations. This makes competing for conversions on saturated marketing channels more costly than ever. Cultivating sustainable growth is imperative for success, and understanding how to keep your CAC low and ROI high is the [&hellip;]<\/p>\n","protected":false},"author":92,"featured_media":30872,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[9721],"tags":[],"class_list":["post-30871","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-text-messaging"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.5 (Yoast SEO v26.5) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Reducing customer acquistion cost with SMS marketing | Birdeye<\/title>\n<meta name=\"description\" content=\"SMS marketing reduces customer acquisition cost while generating leads on their preferred channel for business communication.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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