Get ahead of the factors increasing CAC to make profitability a proactive conversation.
In theory, calculating customer acquisition cost (CAC) is straightforward. Sum all your sales and marketing costs in a period, and divide by the number of customers acquired.
But on that one-off quarterly or yearly cadence, best case, you’re making future decisions based on (out of date) past performance.
What’s far more useful is answering which factors in sales and marketing, or even the types of customers you are acquiring, are causing your CAC to increase or decrease, as you invest in new programs. With those insights, you could attribute individual marketing channels, campaigns, promotions, sales discounts, field marketing and event costs, and more to get an accurate sum of where in the marketing funnel you should intervene to reduce CAC.
Customer acquisition cost (CAC) is the total cost of your sales and marketing efforts needed to acquire a customer.
CAC = Total cost of sales & marketing / # of customers acquired
Track your data at the customer or account level to see the driving factors behind your customer acquisition cost. Each row should represent a unique customer.
To diagnose the driving factors behind CAC, make your dataset as wide as possible. Start with the recommended fields below and add as many descriptive variables as you can to augment your analysis.
Account Creation Date
First Touch Attribution
Last Touch Attribution
Customer Tenure (Days)
New Customer (T/F)
Time to Value
Fixed marketing costs
Program marketing costs
Cost to onboard