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Reduce your CAC and improve your exit multiple with Press Releases: eReleases.com’s Mickie Kennedy

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Reduce your CAC and improve your exit multiple with Press Releases: eReleases.com’s Mickie Kennedy

Two ways will enable you to determine whether you have a business with healthy growth: First is Customer Acquisition Cost (CAC), which is the cost of your business to acquire new customers. Second is Customer Lifetime Value (CLV), which is the total revenue you generate from a customer from every transaction with your company in its lifetime. In this article, we will delve into the importance of CAC.

Understanding Customer Acquisition Cost

Customer acquisition Cost (CAC) is the cost you incur over a certain period in acquiring new paying customers, which is crucial in understanding how to build long-term relationships with customers. To determine the CAC score, use the following formula:

CAC = Total Marketing and Sales Costs/ Number of New Customers Acquired

Higher revenue from each customer in its relationship in the lifetime of your business compared to the CAC score shows healthy growth for the company.

Can CAC Score Be Reduced

CAC score is a much more advanced metric that compares your customer acquisition cost to the ideal industry CAC. Before most business owners’ knowledge, CAC scores can be reduced. Just as coronary arteries must remain clear to ensure a healthy heart, a business must keep its CAC low to maintain financial health. It isn’t required to keep spending a lot on customer acquisition, ensuring efficiency on marketing and sales expenses and utilizing it to be effective will help acquire new customers at a lower cost.

The Role of Exit Multiples in Business Valuation

Exit multiple is one of the easiest ways to help determine a business’s value based on the value of its financial performance when the sale happens. Understanding exit multiple valuation helps the buyer and the seller gain valuable insights during business deals like mergers and acquisitions.

How to Reduce CAC

It is ideal for a company to have a low CAC to maximize revenue generation. If you are asking right now, “How do I reduce a high CAC score”? Then the following strategies on how to reduce CAC score effectively will help you:

  • Improve Targeting. Ensure that your target audience is invested in your products or services, and focus on high-potential leads to not waste marketing efforts on uninterested customers.
     
  • Improve Customer Retention. Improving customer retention, especially among existing customers, helps reduce customer acquisition costs. Repeat customers often spend more compared to new consumers, and improving the customer experience will help drive a significant increase in revenue.
     
  • Referrals. Having consumers who value the quality of your products and services drives the acquisition of new customers. Offering incentives or discounts for consumers to refer to will be an excellent way to increase customer base.
     
  • Organic Social Media. Posting on social media is free. Utilize it to lead potential customers to your landing pages to generate more conversions.
     

These are the ways a business can reduce CAC, which helps foster healthy business growth effectively.

The Power Of Press Releases In Modern Marketing

Press releases have been a valuable and dependable tool for businesses to provide news and updates to consumers, helping to impact user experience positively. They help build brand awareness and enhance your business’s credibility, enabling companies to communicate their messages to consumers to strengthen their market position.

How Press Releases Can Reduce CAC

Press releases expose your brands to wider audiences: once picked up by news outlets, it serves as an advertising campaign for your business. It also helps lead businesses’ credibility, and consumers are more likely to engage with companies they find from reliable sources, helping drive more traffic and increase conversions.

The Impact of Press Releases on Exit Multiples

Press releases don’t just increase the company’s brand awareness. Still, they are broadcasted from reliable sources, making them more appealing to buyers and leading to higher valuations without costly marketing campaigns. This type of engagement positions the company strategically so that it results in competitive offers from numerous prospective acquirers, boosting the business’s chances of successful exit.

How To Find Exit Multiple

Exit multiple is one of the easiest ways for business valuation; it uses EBITDA, which is earnings before interest, taxes, depreciation, and amortization. To know how to determine exit multiple, you’d first need to compute your Enterprise Value (EV) and make use of the following formula:

EV = Market Value of the Company + Total Debt – Cash

Now you can compute for your exit multiple:

Exit Multiple = EV / EBITDA

Exit multiple gives you a solid idea of your business value and easy-to-understand financial figures.

Reduce CAC Score

Reducing CAC score does not directly signify that the business will gain higher noticeable numbers. When CAC is reduced, it should be due to the companies’ resources being utilized better by more practical and cost-effective marketing strategies to ensure that revenue from consumers is higher compared to CAC.

Reducing CAC without increasing CLV will not lead to the business gaining higher business valuations for a successful exit or healthy growth.

Best Practices For Leveraging Press Releases

As previously mentioned, a press release is a cost-effective way to offer significant advantages to any company. Here are ways for you to leverage press releases to help drive business growth:

  • Write a Press Release. To leverage a press release for your company, it must be informative and interesting enough for a reader to indulge in your business.
     
  • Create a Captivating Headline. The headline is the first thing anyone sees online; it must be captivating enough to capture everyone’s attention.
     
  • Eliminate Industry Jargon. Using too many technical terms might confuse many readers; assume that the readers know nothing about your industry when writing a press release.
     

Following those as mentioned above will help ensure that press releases work in the favor of your company and lead to more conversions.

Measuring The Success Of Your Press Release Strategy

It is essential to track all the key performance indicators to measure the success of your press release. Monitoring conversions, website traffic, and media coverage will reflect the impact of the press release on your company and whether it did what you hoped it would do for your business. This helps gauge the success of your release strategy, providing better insights for future optimization.

In conclusion, by optimizing marketing spend, not only can you reduce CAC score but understanding the effects of having a low CAC score helps businesses gain sustainable growth for a brighter future and maximize exit multiples. Implementing strategies that better build the business’s brand awareness and credibility and increase its appeal to consumers and prospective buyers, help lead to a successful exit and higher valuations.

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