Why Tracking Customer Acquisition Costs Is Essential in Today’s Uncertain Economy

The #1 driver of the American economy is shopping, and consumers are slowing down as inflation drives prices up while wages lag. At 3.5%, the savings rate is its lowest since 2008 and far below the pre-COVID rate of 9%. Meanwhile, more than two-thirds of workers are holding management accountable for a better workplace, and 56% are only willing to wait 30 to 60 days for changes before leaving. Trends of “quiet quitting” are skyrocketing just as businesses need productive employees, and burnt-out managers are quitting at elevated levels.

Seeing businesses reel from this uncertainty and contract in the face of economic hits, Crisis management veteran Karla Jo Helms of JOTO PR Disruptors, an “Anti-PR” agency that puts innovative tech companies on the map, warns against the long-term repercussions of slashing marketing budgets during economic downturns. Advertising is essential to the U.S. economy, with each $1 invested generating about $21 in sales.

While some indicators point to a soft landing for the United States in any pending global recession, major corporations are tightening their belts. Unfortunately, cutting too much of the marketing budget can have a spiraling negative effect on the gross domestic product (GDP). The total impact of advertising and its multiplier effects account for more than 18.% of the U.S. GDP, supporting nearly 20% of all American jobs.

Ms. Helms forewarns, “Inefficiently cutting its marketing budget exposes a business to losing market share. As the economy recovers, businesses that slowed or lost momentum will have to spend significantly more to recover and compete. Their competitors that increased marketing efficiency by focusing on customer acquisition costs will see accelerated growth.”

Customer acquisition cost (CAC) is a key performance indicator that helps businesses grow while avoiding overspending. To calculate CAC for a time frame, divide sales and marketing costs by the number of new customers acquired during that period.

For sustainable health, companies should allocate marketing budgets between sustaining current revenues and growth. Experts recommend a total marketing budget between 6 and 7% of sales revenue. However, Helms states in times of crisis or economic uncertainty, doubling that budget has proven to increase revenues.

“Promote heavily, organize later,” says Helms whose experience in crisis management taught her one thing – when crisis looms, communicate more to increase revenues.

With recession fears looming, major companies like H&M, Netflix, and Comcast are cutting marketing budgets. However, studies of the most resilient retailers show they maintain their marketing spending even during a recession. This strategy allows them to gain market share over their competitors during economic contractions.

Ms. Helms says, “Loyal customers drive cash flow and organic growth. During a recession, marketing isn’t optional. It’s an essential, productive expense that brings in revenues from existing and new customers. The key is using smart marketing strategies to increase visibility and position your business as a thought leader.”

Thought leadership is a powerful way to leverage marketing dollars. Nearly 60% of B2B buyers report that thought leadership builds awareness and credibility and is essential to their decision to work with any brand.

“Customer acquisition is less costly and time-consuming when prospects are already familiar with your brand,” explains Helms.

To maximize their marketing budget and maintain growth during economic uncertainty, JoTo PR introduces the new Anti-PR Recession-Proof Service for B2B technology companies to optimize their marketing budget and maintain growth.

Familiarity “In a Box” is a multichannel disruptive Anti-PR package for companies challenging the status quo.

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