101; cost of acquisition
Small business owners should not ignore calculating cost of acquisition
Marketing
Small business owners should not ignore calculating cost of acquisition
Ex CEO of Google India Rajan Anandan, did not invest in a business. The owner did not know the cost of acquisition (CAC). Running out of cash and pricing/ cost issues are two of the biggest reasons of failure.
The maths to calculate is CAC is adding up all the marketing costs to acquire more customers. Then dividing it by new customers from the campaign. If a business’s marketing expenses was INR 10,000 on marketing in a year. And, it acquired 100 customers, their CAC is INR 100.
As per marketer Neil Patel: CAC, as you probably know, is the cost of convincing a potential customer to buy a product or service.CAC metric helps in determining profitability, by looking at the difference between how much money can be extracted from customers and the costs of extracting it.
CAC helps businesses to optimize the return on the advertising investments.
Some examples of CAC expenses are ad spend, employee salaries, creative costs, technical costs, publishing costs, production costs, inventory upkeep. Learn from the experts, who calculated CAC for businesses such as Facebook, Hubspot and Dropbox.
Worth your time: Complete guide by Salesforce Link