In this article, we'll shed some light on the cost of customer acquisition: why this metric is important for businesses and how to calculate cac, use it and reduce it without any loss of efficiency. Content what is the customer acquisition cost? What is a good customer acquisition cost? Why calculate the cac anyway? How to calculate the cac how to decrease the cac what is the customer acquisition cost? Customer acquisition cost is the money a business spends to attract a profitable customer. Typically, this metric is abbreviated as cac. However, be sure not to confuse cac with cpl (cost per lead), a similar metric indicating a callback request, to a phone number or email address provided by a potential customer.
In other words, it is any step a prospect takes down the sales funnel. However, a lead will not necessarily become a customer and generate a profit. What is a good company mailing list customer acquisition cost? To understand if you can afford your current cac, you need to calculate your customer lifetime value (ltv), which is the profit generated for the business by an average customer. A business is considered profitable if the customer lifetime value is three times the customer acquisition cost. If the spread is smaller, consider revising your strategy and cutting costs, as you risk earning no profit or even staying in the red. Why calculate the cac anyway? Let's try to calculate the cac using this basic formula: divide the cost of the
Promotional campaign by the number of customers generated by it. For example, a facebook ad campaign that costs $50 brought you five new orders. This means that each new customer cost you $10. At the same time, a sponsored link in google cost $100 and generated seven new orders. In this case, the cac earns about $14. This basic formula of customer acquisition cost does not take into account the various additional costs. However, the main thing is clear: by calculating the cac, you can understand which marketing channel brings you customers at the lowest cost and determine the profitability of your business. To note! Be sure to calculate not only the cac but also the ltv for each channel. Some platforms