Customer Acquisition Cost (CAC)
When you say customer acquisition cost, you are opening the window to a huge world.
The customer acquisition cost is one of the main factors determining your business sustainability. So, it is worth the effort to understand in depth how it may impact your buinsess.
Here you can find all the deepenings you need about customer acquisition cost.
Back to basics, the customer acquisition cost is generally defined as the marketing&communication spending in a given timeframe divided by the numer of new customers acquired in the reference timeframe.
When you read such definition is almost impossible not agree with. But, the truth is that it works better on paper than in practice.
Why the traditional customer acquisition formula is a bit complex to be put in practice?
If you take the last month as the reference timeframe, you know exactly how much money you have spent for your Marketing & Communication plan. You can also get the exact numbers of new customers acquired.
But, what about the people who will get back to buy from you in a couple of months just because of a slower decision process? Here the formula fails.
This means that you should take the raw concept the formula gives you and try to apply it taking into account that the customer acquisition process is not a linear and instant path.
When we talk about performace marketing, it is probably easier to track the CAC because we are operating in an enviroment we have more control on.
But, hopefully, you will come up with other customer acquisition ideas along using perfomance marketing channels.
And when you add this layer to your marketing and communication plan, computing the customer acquisition cost may be trickier.
There's probably no immediate solution to the problem, so you should exploit at best your technology and analytics stack to compute the CAC.
