Customer Acquisition Cost in Southeast Asia: What’s a good benchmark? Image: Pexels As a business or brand owner, you would know that customer acquisition cost (CAC) is the price you pay to convert a lead into a customer. CAC is undoubtedly a critical metric that speaks to any business in measuring how successful their marketing and sales strategy is. In our previous article, we defined customer acquisition cost as the total amount that is spent through marketing and sales in a specific time period. The simplest formula for calculating CAC is (Money + Time Spent) / Number of Customers Acquired, and the article further broke down the cost into other variables – which you can refer to and then be guided accordingly. Formulas aside, understanding what a good CAC benchmark is, however, not always straightforward. Of course, the general notion is that CAC is typically expensive but there are various factors that influence benchmark ranges; from the type of industry to location and the actual product and services offered itself. Now, you may have done your own research on what the typical CAC is for your industry, and came across something that looked like this: Travel: $7 Retail: $10 Consumer Goods: $22 Manufacturing: $83 Transportation: $98 Marketing Agency: $141 Financial: $175 Technology (Hardware): $182 Real Estate: $213 Banking/Insurance: $303 Telecom: $315 Technology (Software): $395. Although the data above may give you an idea of what kind of CAC to expect, do note that it may very well be outdated, and not geographically relevant – especially if your business, brand and target audience are based in Southeast Asia. Examples of average CAC in Southeast Asia To help you get a sense of whether your current approach is financially sound or not (in other words, whether you have a good customer acquisition cost), we’ve compiled some information about the average customer acquisition cost across several different industries within Southeast Asia. Fintech According to a report by AppsFlyer, a marketing analytics provider, marketing spend in the fintech industry, specifically on financial apps (think the likes of Grab, Go-Jek and Samsung Pay) averages at over $200 per customer acquisition. Image: TechInAsia Online fashion Shein’s meteoric rise globally has made it a marketplace giant that has surpassed Amazon’s total mobile app downloads in 2021. According to an analysis by Shopify Singapore, this industry clocks in at an average customer acquisition cost of $129 – though this may vary depending on the type of brand and products sold. Image: Shopify Singapore Mobile gaming As more and more companies invest in the lucrative world of e-sports, the industry has now become a force to be reckoned with. If you are operating in this space, the customer acquisition cost is not as simple as an app download. Measuring the effectiveness of your overall marketing strategy here would mean taking into account the total cost to install, register and more importantly, in-app purchases. A study by performance-based mobile app marketing and retargeting platform Liftoff indicated that when data is compared to the rest of the world, the overall customer acquisition costs for gaming apps are 30% lower in Southeast Asia. This brings the total cost for the industry across the sub-region to $173.75 per user. How to decrease your customer acquisition cost After studying the reports and statistics presented above, you may feel the need to analyse your own numbers much closer and stack them up against some of the leading industry’s data. Should you find that you are missing the mark and want to work on decreasing your customer acquisition cost, here are three key levers that can be applied to soften your spending: Increase your ratio of customers acquired to your total headcount. This will directly impact your bottom line costs and profit margins by ensuring your in-house cost is fit for purpose in the first place. Increase your organic acquisition versus paid acquisition (such as targeted digital ads). It is a no-brainer that the cheaper or less you spend on marketing costs in the first place, the lower your customer acquisition cost is, what with the skyrocketing digital advertising costs. Relook your brand positioning and content strategy to boost conversion rates, making your ads and their touchpoint channels (such as your landing site) more efficient and appealing to the target audience. Improve your CAC with SalesWorks Are you looking to understand the customer acquisition cost benchmarks better and subsequently ensure that your business or brand is on par with them? SalesWorks can help you gain clarity and understanding of what’s relevant to your business and industry, and effectively bring your strategies to the next level. We’re ardent believers of the old business adage, “You can’t manage what you don’t measure”, and would be more than happy to assist you wherever needed – be it in benchmarking, improving or even measuring. Get in touch with us by reaching out to our team here.