The cost of customer acquisition

• is the total cost of sales and marketing What does it mean to get a new customer during a specific period of time?

What is the cost of customer acquisition

The customer acquisition cost (CAC) of a company or business is the total cost of sales and marketing what it means to obtain a new customer during a specific period of time.

Said total cost includes all program expenses and marketing, salaries, commissions, bonuses, and overhead associated with the process of attracting new leads and converting them into customers.

This index is important information that allows:

• Analyze conversion strategies, their effectiveness and their execution.
• Make the decisions about where to focus and spend more resources.
• Evaluate the return on the investment made.
• Optimize business model strategies.

The CAC is an indicator of the success of the actions of marketing and the performance of sales campaigns. Customer acquisition cost is an important key performance metric that your business should monitor to determine the effectiveness of your campaigns.

How is it calculated?

It is an essential metric to measure the financial health of a company:

• Determine the period to be evaluated (month, quarter or year).
• Consider the total expenses in marketing and sales.
• Divide said expense by the number of new customers obtained in that period.

CAC = Cost of marketing and sales / Number of customers acquired

The numerator includes from investment in advertising, to technical costs, salaries or the software, among others.

How to improve CAC

The company is interested in reducing the cost of customer acquisition and, for this, it should:

• Boost Lead Conversion Rate:

With Google Analytics you can obtain data and statistics on the frequency with which customers abandon their shopping carts after adding an item. In short, it is important to offer the best customer experience is the big goal.

• Add value to your offer:

The value that users perceive of products and services is subjective. For this reason, it is essential to know exactly what adds value to the company's customers.

• Use a CRM system:

A CRM platform can track new customers, their movement through the marketing funnel, how much they buy, when and where, the level of loyalty, etc.

• Have the best information to make the best decisions:

Really knowing the business's potential customers and having the right information at the moment you need it will save time and improve conversions.