Deep dive into a bank’s customer acquisition cost
Building a customer acquisition strategy for banks that nourishes your brand’s online presence and prioritizes the customer is necessary in light of shifting consumer preferences. Let’s find out with SmartOSC Fintech to get a deep knowledge of bank customer acquisition cost.
How can I determine my CAC (client acquisition cost)?
Customer Acquisition Cost, or “CAC,” is a business term that measures how much money a company spends to bring on a net new customer.
In other words, this statistic shows the entire costs for acquiring consumers, such as sales and marketing expenses, as a percentage of all net new customers for a certain time period.
Any company, including banks, should measure bank customer acquisition cost
as a fundamental business metric to understand which market segments and regions are the most effective for selling their goods and services.
How is CAC calculated?
As previously mentioned, the CAC statistic is determined by simply dividing the entire cost of acquiring consumers (cost of sales and marketing) for a particular time period by the total number of net new customers gained over that time.
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If we were to turn that into a formula, it would be as follows:
Total sales and marketing costs) / (number of new clients).
For instance, the bank customer acquisition cost would be $55 if the bank spent $55,000 to add 1,000 net new customers in 2021.
CAC = ($55,000 spent) / (1000 customers) = $55 per customer
Why is it so crucial for banks to comprehend CAC?
The cost of acquiring a customer directly predicts how successful your banking business and many other enterprises will be in the future.
This is the case since the majority of banks invest a significant amount of time and money in creating new goods and services before ever seeing a return on that investment per client.
As time goes on and banks start to add up the months it takes to recover from bank customer acquisition cost and actually makes a profit per client, as described on the graph below, which represents the entire CAC flow from the early period of the customer acquisition activities.
How can banking CAC be reduced?
In general, every company wants to lower bank customer acquisition cost, and banks are no exception.
In general, CAC may be decreased in a number of ways:
- Streamline your marketing and sales channels. Understanding how many visits result in leads, how many leads result in opportunities.
- Increase the quantity of consumers you acquire while improving your conversion rates.
- Marketing channels should be optimized. You will quickly identify which channels are the most profitable for your company as you begin tracking CAC.
- Improve customer interaction. You should be looking for a solution to reduce the time it takes for new clients to get engaged with your goods and services in order to start turning a profit more quickly.
How may digital client onboarding lower the CAC for a bank?
The digitalization period, right now, would be the ideal moment if we had to pick one to always look for methods to improve bank customer acquisition cost and consider how to save them time and effort.
Most customers leave a bank during the onboarding procedures for at least one of the reasons listed below, according to several polls and our experience across multiple geographies and across tens of banks:
- Cumbersome administrative procedures
- A protracted onboarding procedure
- Long-term authentication
- Form completion is difficult.
The aforementioned strategies, together with a thorough grasp of your customers’ preferences and bank customer acquisition cost, will put your business in a strong position to promote client acquisition and maximize. Click here to learn how to access SmartOSC Fintech information, such as that on fintech.