The formula is as follows:
Where:
CAC = Customer Acquisition Cost.
MCC = Total Marketing Campaign Cost Related to phone number identifier philippines Acquisition (Not Retention).
W = Salaries associated with marketing and sales (gross salaries, i.e. what it actually costs the company).
S = Cost of all marketing and sales software (marketing automation, A/B testing, analytics, CRM, etc.)
PS = Any additional professional services used in marketing/sales (Designers, Consultants, Agencies, etc.)
O = Other general expenses related to marketing and sales.
CA = Total customers acquired.
An example:
MCC = cost of a commercial ($2000).
W = cost of a marketing manager ($2,500).
PS= investment in Adwords ($5000) and investment in Facebook Ads ($5000).
S = Inbound Marketing software ($800) and CRM software ($30).
O= other services ($50).
CA = 10 customers acquired.
CAC=$2000+$2500+$5000+$5000+$830+$50)/10
CAC=$15380/10
CAC= $1538
This means that your cost to acquire each of your customers is $1,538 , but the idea is to improve this number.
Why is it so important to calculate CAC?
Customer Acquisition Cost (CAC) along with Customer Lifetime Value (LTV) is one of the most important metrics for any business.
Why? Because your business needs to make money. Which means you need to get a return on investment ( ROI ) from your marketing and sales campaigns.