Congratulations, you've managed to persuade a customer to
purchase your product or service. In fact, you have managed to
repeat this action over and over again. But, do you know the true
cost to acquiring those customers and have you figured out how to
improve that cost?
Your customer acquisition cost (CAC) is a
KPI for growth that provides insight for your business
operations and should be a focal point for key stakeholders. CAC is
the amount of money you need to invest in order to win one new
customer. When coupled with the profit you expect to receive from
that customer, you can then decide whether or not it makes sense to
continue investing to bring in more customers.
I recently had a client ask how they might capture the cost of
customer acquisition. To put it simply, tracking it is certainly
the first step, but of course the real goal is to lower your CAC.
By lowering your CAC, it then makes customers more profitable to
you.
