Most B2B businesses attract high acquisition costs (CACs) due to stiff competition, difficulty generating quality leads, and longer sales cycles.

The first step in optimizing the B2B customer acquisition cost is accurately calculating the CAC.

This guide will cover how to calculate CAC and the factors that influence it. We’ll also delve into practical B2B strategies for improving CAC.

TL;DR – B2B Customer Acquisition Cost

The average customer acquisition costs differ significantly across various B2B industries. For example:

• B2B SaaS is $239
• Commercial and business insurance is $1,280

Here are steps to calculate CAC:

Step 1: Combine marketing and sales costs

Step 2: Determine new customers acquired

Step 3: Apply the CAC formula

More details on these steps later in the blog.

Want to optimize your B2B CAC?

With 20+ years of marketing experience, I can help you craft a B2B acquisition strategy unique to your firm’s needs. We will remove unnecessary steps from the sales process and create personalized messaging that fosters customer relations.

Join me on a 20-minute discovery call to see if we can work together to develop a strategy that drives more conversions and increases your ROI.

The Link Between CAC and Business Growth

Although complex, the relationship between CAC and business growth is close. 

Here’s a breakdown of how these two relate:

• Indicator for Business Expansion: A low CAC gives B2B brands the confidence to expand their businesses effectively. Lower CAC frees up resources for targeting new groups, improving products, and exploring new markets.
• Generating Revenue: A sustainable business requires optimizing the CAC. If a B2B business can keep the CAC low, it generates more revenue and has a healthy profit margin.
• Key for Improving Customer Lifetime Value (CLV): Customer acquisition costs must also be considered in the context of customer lifetime value. 

CAC is often compared with CLV, with the aim of keeping the long-term value of acquiring clients higher than the CAC. By lowering the CAC value, B2B businesses can improve their CLV.

Factors Influencing Cost of Acquiring Customers in B2B

B2B companies must optimize their strategies around certain factors that influence their CAC.

Let’s see the 7 major factors:

1. Marketing and Advertising Costs: The costs of marketing activities, such as SEO, social media, and influencer marketing, directly determine the acquisition costs. Higher marketing and ad spending increases the CAC.
2. Marketing Strategies: Some channels, like paid advertising, are usually more expensive than social media marketing.
3. Business Competition: If a business operates in a saturated market with many competitors, it must spend more to acquire new customers.
4. Length of the Sales Cycle: Due to complex products or extensive decision-making, it can take longer for B2B businesses to convert prospects into paying customers. Therefore, a company will need more resources, and the CAC will increase.
5. Product Positioning is crucial in determining the costs of attracting customers. B2B businesses with well-defined value propositions need to spend less to make their offerings attractive.
6. Conversion Rate: The number of times a brand can convert leads into paying customers determines the B2B customer acquisition costs. When more customers convert, a business effectively spreads its marketing efforts across more clients, lowering the CAC.
7. Industry: The CAC might be higher in competitive sectors like commercial insurance because they compete for the attention of a limited audience.

Customer Acquisition Cost Calculation Process

A B2B company must determine the overall efficiency and ROI of its customer acquisition strategies. 

Here’s how to calculate CAC in three steps:

Step 1: Combine Marketing and Sales Costs

Gather all the costs associated with acquiring customers during a specific period— usually monthly or quarterly:

• Ad spend
• Content, SEO, and creatives salaries
• Sales and marketing employee salaries
• Cost of the sales and marketing tech stack, including CRM, analytical tools, and more.

Step 2: Determine New Customers Acquired

Determine the number of new customers the company has acquired during the selected period.

Step 3: Apply the Formula

The next step is to apply the CAC formula to track the company’s spending:

Customer Acquisition Costs (CAC)= Total sales + Marketing costs / Number of new customers acquired

Benchmarks for Average Customer Acquisition Cost by Industry

Comparing the CAC of a B2B business against industry standards can help you gauge performance and set realistic goals.

Here are two common ways to do this:

1. CLV: CAC Ratio

The lifetime customer value (CLV) shows the total worth of a customer (in our case, a business) to a B2B company in terms of their relationship with the brand.

The CLV:CAC ratio compares the cost of acquiring a new customer for a B2B brand to the average value of that customer. 

Typically, B2B businesses prioritizing profitability should aim for a 3:1 or higher ratio. They should earn three times as much from each customer as they spend acquiring that client.

Here are some specific LTV-to-CAC benchmarks:

2. CAC by B2B Businesses

Here’s a list of the average customer acquisition costs for different B2B business niches:

Strategies for Achieving Low Customer Acquisition Cost 

Learn the 7 strategies to bring in new customers with the lowest marketing spend:

1. Optimize Marketing Channels

Analyze customer acquisition analytics, like the cost per lead and conversion rate by channel, to identify channels that generate cost-effective leads. Focus on the top-performing channels while pausing (or improving) the poor-performing ones.

2. Optimize the Sales Funnel

Analyze the funnel to identify where customers drop off, causing a reduction in conversion rates and leading to higher CAC. Implement tactics to reduce churn, including an engaging onboarding process and shortening checkout.

3. Leverage Automation

Focus on streamlining acquisition efforts and reducing manual, repetitive tasks that can add to acquisition spend. For example, B2B companies can use marketing automation tools like Hubspot to gather data from email campaigns and enhance lead nurturing processes.

4. Use AI for Personalized Experiences

B2B businesses can leverage artificial intelligence (AI) and machine learning to personalize customer experiences at scale. Typical uses of AI include analyzing historical data to tailor product recommendations and predicting customer needs before they arise. AI can also enable targeted campaigns by identifying audiences that look alike.

5. A/B Testing

B2B businesses can conduct A/B tests on their messaging copy, pricing pages, CTAs, and discount offers to help discover improvements that can increase conversion rates.

6. Improve Customer Retention

A retention strategy allows a B2B business to acquire more money from existing customers, increasing the CLV. The company spends less money on acquiring customers and focuses on nurturing existing customers, lowering the acquisition costs.

7. Establish a Referral Program

Besides lowering the CAC, a referral program also brings in qualified leads. B2B businesses should set up loyalty programs and offer incentives, discounts, and cash rewards to encourage existing customers to recommend them.

Hire Me for the Most Effective Customer Acquisition Strategy

As a customer acquisition consultant, here are the areas I can help you with:

• Developing a Unique Value Proposition (UVP): We will collaborate on creating a compelling value proposition statement that differentiates your B2B brand, increases the perceived value of your offerings, and enhances your business presence.
• Reviewing (Refining) Your Acquisition Strategy: Together, we will analyze all areas of your B2B acquisition strategy, pinpoint specific areas that need improvement, and provide insights to improve the funnel.
• Developing Targeted Campaigns: We will collaborate to identify where your prospects spend time and create strategic campaigns on your top-performing channels, bringing high-intent customers.
• Crafting Personalized Messaging: I will guide you to create personalized emotional messaging that optimizes the B2B customer experience, nurtures prospects to convert, and fosters stronger relationships.

Let’s connect and explore how we can collaborate effectively to lower your CAC and build an engaging, loyal customer base that will contribute to your long-term success.

Frequently Asked Questions (FAQs) 

Check out the answers to the commonly asked questions about the cost of acquiring B2B customers:

What Influences Industry Average Customer Acquisition Costs?

Here are the factors that influence the average customer acquisition costs:

• The target audience
• Choice of marketing channels
• Level of competition in the B2B industry
• Differentiation of a product and service
• Efficiency of sales and conversion processes

What Are Common Mistakes in Customer Acquisition B2B?

The 3 common mistakes in B2B customer acquisition include:

1. Not tailoring the marketing strategy to meet the distinct needs of B2B businesses.
2. Lack of a CRM system to track leads and manage customer data.
3. Highlighting the technical features of a B2B solution without explaining how it solves a business’s needs.

You can avoid these mistakes by collaborating with me to develop an acquisition strategy and UVP tailored to your needs. We will also focus on identifying where your target businesses spend their time and tailoring your messaging for each platform.

Is It Possible to Reduce Customer Acquisition Costs Without Sacrificing Quality?

Yes.

Here are a few tactics B2B brands can apply to reduce the CAC costs while focusing on quality:

1. Prioritize customer retention using loyalty programs.
2. Tailor the customer experience according to their preferences and needs.
3. Offer exceptional customer service that builds stronger relationships.
4. Create quality and relevant content that attracts and engages your target audience.
5. Improve the user experience (UX) and the CTAs.

Conclusion

Monitoring the CAC is crucial to keep a business profitable and growing.

From calculating CAC to comparing it to industry benchmarks, every area is vital to the success of a B2B company. To reduce acquisition costs, B2B businesses must leverage AI, strategically optimize the sales funnel, and foster customer loyalty.

Prefer to work with a customer acquisition consultant?

We can collaborate to define your ideal client profile (ICP), conduct competitor analysis, and find the best marketing channels. I also specialize in creating impactful and consistent B2B messaging that fosters trust and builds a loyal client base.

Book a discovery call, and let’s explore how we can drive qualified leads, increase conversion rates, and maximize ROI.