There are several ways to calculate the CAC metric value. The first is simpler, but the second is more informative and takes into account various business indicators. Let’s consider each of them in more detail.
A simple way to calculate
This method is used to obtain average values. If you have a small company or need to quickly assess the profitability of advertising, use the following formula:
CAC = total promotion costs / number of customers.
Important! Consider only real customers for a certain period. These are customers who paid for the order.
What is the problem with this method of calculating CAC? It will not give you an idea of the true state of the company. In fact, you spend much more on attracting customers. For example, you pay for the services of advertising specialists, subscriptions to data management systems. The second method will help to fully reflect them when calculating business metrics.
The complicated way
This approach takes into account all the company’s costs for working with new clients:
CAC = (direct advertising costs + employee salaries + cost of products or services + cost of equipment and software + delivery costs) / number of real clients.
So, if a company uses a website, blog and various types of online advertising to attract customers, it is necessary to take into account the salaries of copywriters and search engine optimization specialists, the price of widgets , and the cost of a CRM system. The CAC value will be higher, but it can be used in further analytics. For example, when calculating another indicator – the lifetime value of a customer (LTV).
It is necessary to determine the cost greece phone number list of attracting customers regularly: this way you can quickly identify problems and fix them. But remember that the metric value itself is not indicative. It must be compared either with data for the past biblioteca castlewood period or with several promotion channels.
It is useful to compare the size of LTV and CAC: the latter should be significantly higher. If the cost of attracting a customer is higher than or equal to his value, think about ways to retain customers and increase the average check. For example, install widgets for your website . The service is available for any business, and the first 14 days of use saudi data are free.