How much can video lower customer acquisition cost?

In Dane Frederiksen's illustrative scenario, a $10,000 video library drops CAC 40%, from $500 to $300 per client. Across 100 new clients that saves $20,000, a 100% net return on the investment.

Quick Answer

• Client value: about $1,200 a year. CAC: $500, mostly paid ads.
• Invest $10,000 in a video library posted on YouTube and your website.
• CAC drops 40% to $300, saving $200 per client.
• 100 clients x $200 = $20,000 saved, minus $10,000 = 100% net return.

We've run this play for B2B teams for years. If you want proof before the process, here's what it looked like for a real team.

Is this a guaranteed result?

No. It is an illustrative scenario. Run it with your own client value, acquisition cost, and investment.

What else do you get?

An asset that keeps working for free after you have paid for it once.

"Also creating an asset that keeps working for free. What a nice outcome." Dane Frederiksen

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Frequently Asked Questions

How do you calculate CAC savings from video?

Subtract the new CAC from the old CAC, multiply by new clients, then subtract the video investment.

What is a realistic video budget for a small B2B software company?

The illustrative scenario uses $10,000 for a video library.

Correction: what is the total savings in this example?

$20,000 (100 clients x $200). The clip says $200,000, which is a slip; the 100% net return is correct.

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Want the full breakdown? Watch the full video, or read the full article.

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Full Clip Transcript

So let's say you have a cheap target company, like their low ticket items, let's say that, you know, you're selling a simple software and let's say a client is worth like $1,200 a year. So customer acquisition costs at $500 per client because they're doing a lot of paid ads. So let's say they spend $10,000 and we make a library of video and we're posting that frequently, putting it out there in the way that I said, like on YouTube and on the website. The math would work out that the customer acquisition cost should drop to 40% down to 300 per client. So the payoff would be is if you sign up 100 new clients, you've saved $200 on customer acquisition costs for each one of those. So that's a total savings of $200,000. So subtract your $10,000 investment from $200 savings and you get 100% net ROI on cash saved. Wow, also creating an asset that keeps working for free and what a nice outcome.

Full Transcript

Here's how to fix a leaky B2B sales funnel and 3x your conversion. I'll show you exactly how we're gonna do that, step by step. Basically the big idea is to make video answers to your buyer questions. They have questions at every stage of their journey and you don't really know what shape that journey is gonna take or what platforms that's gonna happen on. So we're gonna give them video answers to their buyer questions and we're gonna repurpose that content into other formats because you have the transcripts, which are text and you have audio from the video and you also have video which can be embedded on places like your website as well as places like YouTube.

So you're gonna get three times better sales conversions on average because these people are watching this video content on their buyer journey and they're educating themselves until they get 50% or 80% of the way there through their buyer journey and they have most of their questions answered and then they'll be ready to take a sales call or do a software demo, things like that. So they're arriving three X more qualified because they've done their own research and you've done a good job of answering their questions and equipping them to move further down the funnel and step by step they move their way towards that conversion point. So here's some of the benefits of a video for sales strategy. So you're gonna see lower customer acquisition costs by approximately 20 to 50% in under a year because what happens is this investment that you make in making the video compounds over time. If you have ads as soon as you stop buying those they stop working but a compounding asset that builds over time every time someone watches that you get more and more value out of it.

So over time those customer acquisition costs are gonna go down. Plus they're gonna be three times more qualified when they show up there for that first touch point. So also the AI boom, you're gonna win an AI search because video it basically shows up in the search AI search overviews. So YouTube is owned by Google and Google wants you to watch the videos because they have ads and they make a lot of money. And so people are gonna watch that and it's gonna convert better.

So also you can automate low ticket sales with fast videos to eliminate the costly sales calls and drop that customer acquisition 35 to 50%. If you have an expensive ticket item you're gonna unstick the complex enterprise deals by giving buying committees short videos that are gonna cut sales cycle by 23% roughly. Then we talked about the snowball effect rather than renting ad space, a video library compounds over time to bring 66% more organic leads for zero extra media spend once you've already made the video. Then you get extra free content. You can chop up those long videos into ads, shorts, emails, embedded blog posts.

You can even have your sales reps send out these videos to further educate warm prospects. And then the system is, it's gonna be a feedback loop. So each video you make is gonna get better because let me walk you through our process here. So we start on the left with planning. Our goal is to lower customer acquisition costs and convert better.

So we're gonna do some Intel. We're gonna look at how are we showing up in AI search now? What questions are our buyers asking? And then we're gonna look at out of all the possible videos we can make, which ones are the most high likelihood to be helpful? If we're over here and we have a pipeline problem and we wanna get over here to having a good pipeline do we think investing in video content is gonna help educate these buyers and move them?

So then we're gonna come up with a realistic plan out of everything that we could do. And then we're gonna approve the plan and then go into the build mode. So in building, we start with those buyer questions and we're gonna create video answers much like this one, which go in depth, answering the buyer question upfront. And then going into as much detail as we need to get them to the next step in the buying journey. We're gonna post those on YouTube.

We're gonna embed these videos on your blog. So they're also providing more surface area on your own platform so they can get more visibility in AI search. It gives the bots something to chew on so you can actually show up there. So then this is the fun part. We're gonna analyze how these videos perform and based on what we're learning, we're gonna revise either do the videos over and better if they're not converting or we're gonna make the next videos in the buyer journey.

And so here's what that's gonna look like. My buyers ask questions like, how to get cited by AI search with video. And so because I've made video answers to answer that question, I'm showing up over here. You can see that's me. And I'm showing up here in the top spot right here.

My YouTube content is showing up. So I've done a good job answering that buyer question. So I get rewarded by the placement here. And then we're gonna see in our YouTube analytics, are they watching the video? Are they clicking?

So that's your click through rate. And then are they watching your average view duration? Are they getting enough value out of this that their questions get answered and they can move to the next step? So this is really what we're gonna be measuring here. These four things at the top.

We're gonna measure AI visibility, which is showing up in AI search right here. Content consumption, are they actually watching? Are they clicking? And then this is in your CRM and your sales process. Are the qualified leads showing up?

Are they more qualified? Because in theory, they're getting educated by watching the content, so they should show up more qualified. And then that's gonna drive more pipeline. So let's look at a couple scenarios here. So let's say you have a cheap target company, like their low ticket items, let's say that you're selling a simple software and let's say a client is worth like $1,200 a year.

So customer acquisition costs at 500 per client because they're doing a lot of paid ads. So let's say they spend $10,000 and we make a library of video and we're posting that frequently, putting it out there in the way that I said, like on YouTube and on the website, the math would work out that the customer acquisition should cross drop to 40% down to 300 per client. So the payoff would be, is if you sign up 100 new clients, you've saved $200 on customer acquisition costs for each one of those. So that's a total savings of 200,000. So subtract your $10,000 investment from $200 savings and you get 100% net ROI on cash saved.

Wow, also creating an asset that keeps working for free. What a nice outcome. Then let's look at scenario B. This is a bigger ticket item company. So let's say you have a complex enterprise solution for 100,000 per client.

Customer acquisition costs 30K per client because of these long sales cycles and endless meetings and the human sales wages. So the video first investment, if you've invested 30K to create a library of deep dive technical modular videos that your internal champions can share inside boardrooms to the other people that need to get educated on their buying journey. So the math is, if we're letting these videos sell asynchronously by a large committee, we're gonna cut our sales time and we're gonna drop customer acquisition by 25% down to 22,500 per client. So payoff would be if you'd sign just 10 new enterprise clients, you save $7,500 customer acquisition costs per deal. So that's 75K in total savings.

So after covering your initial 30K investment, you walk away with an extra 45,000 and saved expenses, delivering 150% net ROI on sales labor efficiency. So you can run your own numbers, but those are two scenarios, both small and big. So really the whole point is video exists to make sales easier and you're gonna get three times better sales conversions from AI leads because they've done the education themselves and you've done a good job of answering the questions. So you showed up, you were part of their consideration set. Every step of the way, earning trust, keeping visibility.

And then when they're ready to talk, it's gonna convert three times better, roughly. So those are the benefits of a video first strategy. If you want help with this, just reach out. This is what I do and happy to show you what this would look like for you. Okay, good luck.