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How To Calculate Customer Acquisition Cost? To calculate customer acquisition cost, you simply divide the total expenses associated with acquiring customers by the total number of customers that your business has acquired over a certain period. Maybe 100% of the traffic to your website or store doesn’t convert into a sale right away, but if you use email marketing, you can increase the customer acquisition or retention by adding them onto your email list.  Email could be a viable cost for you. Please consider supporting us by disabling your ad blocker. Help others start or grow their businesses. Have you had problems balancing customer acquisition costs with lifetime customer value?  Were you able to fix that?  How did you fix it?  Leave your comments, questions, concerns, and feedback below. They make each acquired customer worth the price.  In my article on Customer Journey Mapping, I talked about analyzing your 7 business systems and analyzing pain points and opportunities to grow the relationship.  To improve lifetime customer value you want to find: Jay Abraham recommends two ways to increase customers without adding onto acquisition costs.  He says you should increase customer retention and increase referrals. This would be anything that goes into selling a good or service. Now to the meat and potatoes of the article…. Not long ago, I received a card in the mail from my chiropractor with a complimentary adjustment for my birthday.  I thought it was a genius way to increase the frequency of purchase. In this example above CAC is calculated on a 60 day ago basis, meaning that Customer Acquisition Cost here is calculated by dividing Sales & Marketing Costs from 60 days prior (2 months) by the number of new customers acquired in a current month. In theory, customer acquisition cost should be a simple calculation, but it can vary depending on your business model. Take the total acquisition spend and divide it by the number of customers acquired. You can create more internal engagement with current customers thru blogging, newsletters, or finding other options to make a deeper more personal relationship.  Being a subject authority ot trusted advisor to the customer cements a deeper relationship because they want to know your opinion on certain matters. For example, if a business spent $100 and acquired 2 customers, their customer acquisition cost (CAC) is $50. most businesses fail within the first 5 years, several “business ventures” I’ve taken a shot at, How to Start a Dog Treat Business [2020] – A Step-by-Step Guide, How to Start a Cell Phone Repair Business – A Step-by-Step Guide, ThriveCart Review [2020]: Pros, Cons, and Alternatives, Snag the Startup Entrepreneur's Toolkit - Learn how to Get Consistent Sales Online, Let's Troubleshoot your Online Sales Problems Live! The startup begins with a cost even if you use as many frugal and organic methods as you can.  At the startup phase all businesses start off as an imbalance. It’s likely that if you’re here, you’re looking for a way to, Your email address will not be published. of New Customers Costs included in the total acquisition cost are marketing and advertising expenses, incentives, and discounts, along with salaries for related staff. The calculator calculates three CAC ratios. You have to get your 7 systems set up: the lead generation system, the lead conversion system, the client fulfillment system, the branding system, the job prototypes, the branding system, the management system, and the leadership system. Now, you have the expenses clear, and it’s now time to figure out the return on your investments.  After all of that money was spent, how many customers did you get in return? To calculate the customer acquisition cost, divide the total acquisition costs by the total number of new customers. Take a look at 5 helpful ways to calculate your customer acquisition cost and how these metrics will help you optimise your business processes. This is done by dividing the total amount spent on customer acquisition by the total number of customers acquired, as shown in the equation below. Our website is made possible by displaying online advertisements to our visitors. 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