The CAC is a key measure for anyone’s business. What is customer acquisition cost (CAC)? It is the expense of persuading a potential client to conduct business with you, either by purchasing your goods or using your service.
The CAC formula is relatively straightforward. You just total the expenses required to acquire a customer and divide by the number of acquired customers. The costs that you add up include employee salaries, marketing and purchases costs, employee salaries, outsourced services, and other jobs related to management.
To give you a simple example, consider the following:
Marketing Costs / The Number of Customers Acquired = Customer Acquisition Cost
So, in this case, you could picture working a Tiktok ads campaign to acquire new customers.
You’ve spent $900 in one month, and you got 15 new customers from those Tiktoks. Now, to determine customer acquisition cost, you can calculate the return on investment (ROI) of the campaign as follows:
$900/15 = $60
It cost $60 to acquire each customer. Now take a look at how much they spent. Was it worth it? If you don’t think so, then you may need to start re-thinking some of your sales strategies. You can also implement new marketing initiatives to try to increase your revenue.
How do you go about doing that?
GetVoIP‘s infographic below shows five innovative strategies to increase your CAC now. For instance, you can create an affiliate program that rewards affiliates who bring you the most traffic. A small price to pay for a new customer. It’s a win-win.
You can also create some killer content and optimize it for conversion rates. Especially your high-performing content. For example, Basecamp saw conversions increase by 102.5% when it added human images to its landing pages. Such an easy tweak for such great ROI.
How to calculate customer acquisition cost
Find out how to calculate customer acquisition cost in this infographic below. Optimize your cost and watch your profits skyrocket.
This infographic was created by GetVoIP.