New candidates don’t appear out of thin air — finding new prospects requires investment. The amount you invest to attract a potential candidate for a new role is what is known as your candidate acquisition cost (CAC). This cost considers how much you spend on your recruitment team, tools and marketing and advertising spends to bring in new candidates.
The problem is when staffing firm owners have no clue of their acquisition costs and, as a result, invest too much into recruitment channels that don’t produce candidates and invest too little into the channels that work. On the flip side, firms that understand these numbers are more profitable and thus grow faster.
A rough calculation to find out that figure is to divide your recruitment outlays by the number of candidates attracted. However, you’re not out of the woods yet. Now that you know your acquisition cost, how do you know if it’s feasible? One way to have an idea is to look at the lifetime profit value, or how much money you’ll make over the average relationship you have with a placed candidate, and decide how much of that figure you’re willing to invest in acquiring another candidate.
Once you determine how much you’re willing to invest to acquire a new candidate and compare that to your current acquisition costs, then and only then can you optimally deploy your marketing dollars and drive down your CAC. Here are 10 ideas you can use within your staffing firm to reduce your costs to acquire candidates and subsequently improve your sales and marketing ROI.
Establish a formal referral program. Using the candidates you’ve already placed is one of the most cost-effective measures to help you find new candidates. For every referral you generate, you’ve cut your cost to acquire the original candidate in half!
Create a loyalty reward program. Loyalty programs help you differentiate, provide tangible value and fuel your word-of-mouth efforts. A program like this aimed at maintaining relationships increases lifetime value and, thus, your lifetime profit.
Optimize your advertising campaigns. By improving ad performance and optimizing your ads, you can eliminate wasted ad spend and allocate those funds towards attracting more candidates without increasing the budget.
Invest in training your recruiters. Implementing a training program can significantly decrease your CAC since any incremental improvement in contact or placement rates will magnify your current results.
Narrow your target audience. Focus your marketing dollars on your ideal candidates as opposed to casting a wide net.
Automate. Utilize sales and marketing automation tools so that your recruiters spend more time on high-value activities instead of menial tasks.
Nurture old or stale leads. You’ve already paid to acquire these candidates that have gone stale. Instead of considering them useless, engage them and see if they’ll reconsider your offerings.
Reduce labor costs/outsource. Keep your investment costs low by outsourcing or bringing on contract workers that execute certain tasks without being on the payroll.
Improve candidate web experience. What’s the point of traffic if it’s not converting? Upgrade your web presence so that more of your visitors find and reach you.
Retarget. Don’t consider web visitors who left your website a lost cause — run retargeting ads that follow them around the internet until they convert.
Wrapping It Up
Reducing the cost of attracting new candidates isn’t always easy, but once you’ve figured out your CAC, try these ideas as a part of your long-term strategy to reduce costs, increase profitability and grow faster than your competitors!