CAC (Customer Acquisition Cost) is the amount of a company’s expenses to attract one client. It makes sense to calculate it separately for each marketing channel. This way you will determine the most profitable ones. For example, a company spent 500 rubles to attract one new customer on social networks. If a person bought goods for 400 rubles, then such promotion will be unprofitable for the business.
The CAC indicator should not be confused with other metrics, especially with CPA (Cost Per Action). The latter helps to determine investments germany phone number list in advertising, but not their payback. Thus, the CPA calculation will show how much it costs you to attract people to the site. New users, subscribers, people who ordered a call back from an operator will be taken into account.
As soon as a person makes the first order, he will move into the client category. The costs of working with him will be determined by the CAC formula.
Why does business need CAC: what do calculations of the indicator give?
The main purpose of the metric is to optimize the company’s marketing. With its help, you will determine the most profitable ways to promote products.
Imagine the situation: you paid for advertising with a blogger, you started receiving new requests, the number of subscribers is steadily growing. But several weeks pass, and not a single request has turned into an order. This indicates ineffective spending of the marketing budget. Calculating the cost of attracting customers will save you from such mistakes.
Determining the CAC indicator will allow you to:
- find promising marketing channels – compare the values of individual platforms to choose the most profitable ones for you;
- reduce customer churn;
- Reduce advertising costs – stop using ineffective promotion methods in time.
How are CAC values used in practice? For example, socorro valle you launch three types of marketing activities in parallel: advertisements for a new product line in a search engine, a product recommendation feed on a website, and brochures in sales areas. You spent 70,000 rubles on online product promotion, and the print advertising budget was 40,000 rubles. As a result, you got 80 new customers from the first campaign, and 12 from the second. The simplest calculation shows the following CAC values:
- for contextual advertising: 70,000/80 = 1,750 rubles;
- for booklets: 40,000 / 12 = 3,333 rubles.
This means that it is worth reviewing the structure of the advertising budget: abandon printed materials and direct money to Internet saudi data channels and website development. For example, supplement it with a product recommendation feed to increase the average check.