Whether you run a limo company, a party bus service, or a black car service, your client acquisition cost (CAC) is one of the most important numbers you need to know. Once you know your CAC, you’ll have a much better idea of how many new clients you’ll get each month, given certain advertising spend.
Keep reading to learn how you can determine your CAC and how it varies between Google Ads, Facebook Ads, and SEO services.
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Client Acquisition Cost for Limo Companies
Understanding your CAC will help you determine which marketing strategy is right for you in the long run. It can also help you understand how much you should be spending on marketing each month.
Determining your CAC is simple. Let’s say you’re spending $1,500 a month on marketing and you get 30 clients each month. You’ll simply divide your marketing spend by the number of clients you convert ($1,500/30 = $50). In this example, your CAC is $50 per client.
For every $50 you spend on marketing, you can expect to convert one client.
Let’s look at how CAC differs across Google Ads, Facebook Ads, and with SEO services.
CAC on Google Ads for Limo Drivers
In this example, we’ll estimate that a Google Ads pay-per-click (PPC) campaign costs you $2 per click in your market. Now, it’s important to remember that an ad click doesn’t mean this person is going to call you or even request a quote. Not everyone who visits is going to be a lead.
With a good PPC campaign, perhaps one in every four clicks is going to result in a lead. That means for every $8 you spend on Google Ads, you’ll get one lead. This is NOT your CAC — it’s your lead cost. To find your CAC, you’ll need to determine how many leads it takes for you to close a sale.
If you get 200 leads in a month and manage to get 50 jobs, that means you are converting 25% of your leads into sales (or one in four).
To recap, your cost per lead is $8, and it takes about four leads to make one sale. Your CAC with Google Ads is $32.
Here’s the math:
CAC with Google Ads: $8 x 4 = $32
CAC on Facebook Ads for Limo Drivers
Facebook Ads will typically have a lower cost per click. In this example, we’ll estimate that you’re paying $1 per click in your market.
It’s important to remember that converting leads can be much harder on Facebook. Your audience is not actively searching for your services. They are simply scrolling through their Facebook feeds. As a result, you’ll often need to run a special promotion or offer to capture their attention. This strategy works much better if you’re offering party bus services, wine tours, and other events, rather than providing black car services at airports.
Let’s pretend you run a party bus service, and you have a really good offer running on Facebook. We’ll say clients can book a 5-hour party bus and get $150 off.
Using the same conversion rate as in our Google Ads example, we’ll say that for every four clicks on your ad, you’ll get one lead. Remember, you still don’t know your CAC at this point, just your lead cost, which is $4 per lead ($1 x 4 = $4).
Your closing rate on Facebook will typically be much lower than with Google Ads, and you might see conversion rates as low as 5–10%.
Let’s say your closing rate is 10%. That means every one in ten leads results in a sale.
To recap, your cost per lead is $4. For every ten leads you get, you convert one into a sale. Your CAC with Facebook Ads is $40.
Here’s the math:
CAC with Facebook Ads: $4 x 10 = $40
A key point to remember with Facebook Ads is that when you run an offer, this will cut into your profits. In this case, for every sale you close, you’ll have to shave $150 off of the ticket price.
CAC With SEO for Limo Drivers
It’s tough to make accurate estimates with SEO. Your CAC will depend entirely on how much time and money you have invested into SEO services. SEO is an asset that builds over time. Your first year with SEO will look much different from your third or fourth year, and you’ll have a much higher cost per lead when you are first starting out.
In this example, we’ll assume your website is optimized well for conversions, which means that when someone lands on your website, they can easily find a phone number or request a quote. Using the same lead conversion rate as we did in the previous examples, we’ll say every one in four web visits turns into a lead.
Your lead cost in your first three years with SEO might look like this:
- Year 1: $40 per lead
- Year 2: $15 per lead
- Year 3: $6 per lead
It’s important to note that while you are paying the same amount for SEO each month, you’ll ideally get more leads each month, which means your CAC goes down over time.
Let’s look at what your CAC might look like in those first three years. We’ll assume you convert every one in four leads into a sale, or that you have a 25% close rate. For every four leads, you’ll get one client. Here are the numbers:
- Year 1: $40 x 4 = $160 CAC
- Year 2: $15 x 4 = $60 CAC
- Year 3: $6 x 4 = $24 CAC
As you can see, by year three, your CAC with SEO is down to $24, which is much lower than your CAC with Google Ads ($32) and your CAC with Facebook Ads ($40).
Marketing Strategy for Limo Drivers
In my experience, most transport operators don’t know their CAC. If you want to run a seven or eight-figure business, however, it can be incredibly helpful to know that for every $50 you spend, you’ll get a new client (as an example).
A PPC campaign on Google Ads is a great strategy if you are just starting out. Once you are established, investing in SEO services can be much more valuable in the long term.
Facebook Ads can be helpful if you’re not getting enough leads through Google Ads and SEO, but unless you offer stretch limo services, party buses, wine tours, and events, it can be much harder to close sales, and you’ll likely have to run a discounted offer. Most operators will want to focus on Google Ads at first, and then invest in SEO in the long term.
Improve Your Client Acquisition Cost With Limo Company Marketing Services
A successful online marketing strategy takes time, knowledge, and effort. Remember, this is a highly specialized skill set. No one expects you to learn everything overnight. That’s why we offer online marketing training for limo drivers and transport operators.
If you want an expert to handle your online advertising or get your SEO strategy on point, contact Limo Marketer today
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