Why Cost-Per-Customer Is The Most Important Marketing Metric.
Do you ever wonder how much your company is putting in to acquire a new customer? Whether you are checking website visits, how many people your latest Facebook post reached, or how high your click-through rates are, Customer Acquisition Cost (CAC) will help you better understand just how effective your marketing is. CAC estimates how much you are actually spending to acquire each new customer and is the foundation to more equations that are vital to growing your company.
To calculate CAC, all you need is your sales and marketing cost and how many new customers you have acquired:
Total Cost of Sales & Marketing Cost = Program and advertising spend + salaries + commissions & bonuses + overhead in a month, quarter or year
# of Customers Acquired = Number of new customers in a month, quarter, or year
To keep your CAC low, you’ll need to identify and address marketing inefficiencies for a better fiscal picture.
How many new customers are gaining from traditional advertising methods, like newspaper or billboards? The sad reality is that you cannot actually track new leads or customers with traditional advertising methods. Why not spend your ad dollars on some form of digital advertising that provides customer tracking and statistics? Cost for online advertising can vary but is usually cheaper than traditional methods. Identifying and fixing inefficiencies in your marketing can increase new customers, which, in turn, can lower your overall CAC.
You can lower your CAC (and increase your new customers) even more with automatic marketing workflows. Instead of answering individual website inquiries, set up automatic email replies answering your questions. To automate marketing, send your contacts frequent email communication through an automated email workflow. This, in turn, will decrease the amount of time your employees spend on marketing, sales and customer support, which allows them to spend time on other jobs, and then lowers your CAC.