When you’re starting a business, one of the most important metrics to keep track of is your customer acquisition cost (CAC). This number tells you how much it costs to attract new customers. To calculate CAC, divide your sales and marketing expenses by the total number of clients.
If your CAC is too high, it may be difficult to turn a profit. You’ll need to invest in marketing and sales efforts to bring down your CAC. On the other hand, if your CAC is low, you may be able to grow your business more quickly.
Keep in mind that you want your CAC to be lower than your customer lifetime value (CLV). CLV is the amount of money a customer spends with your company over the course of their relationship with you. You can calculate CLV using this formula:
sales and marketing expenses ÷ total number of clients = CLV
If your CAC is higher than your CLV, you’re losing money on each new customer. However, if your CLV is higher than your CAC, you’re making a profit on each new customer.
Knowing your CAC and CLV is essential for any business. It helps you make smart investments in marketing and sales and grow your company in a profitable way.
Customer acquisition cost (CAC) is a measure of how much it costs to attract new customers. To calculate CAC, divide your sales and marketing expenses by the total number of clients.
If your CAC is too high, it may be difficult to turn a profit. You’ll need to invest in marketing and sales efforts to bring down your CAC. On the other hand, if your CAC is low, you may be able to grow your business more quickly.
Keep in mind that you want your CAC to be lower than your customer lifetime value (CLV). CLV is the amount of money a customer spends with your company over the course of their relationship with you. You can calculate CLV using this formula:
sales and marketing expenses ÷ total number of clients = CLV
If your CAC is higher than your CLV, you’re losing money on each new customer. However, if your CLV is higher than your CAC, you’re making a profit on each new customer.
Knowing your CAC and CLV is essential for any business. It helps you make smart investments in marketing and sales and grow your company in a profitable way.
Customer acquisition cost (CAC) is a measure of how much it costs to attract new customers. To calculate CAC, divide your sales and marketing expenses by the total number of clients.
If your CAC is too high, it may be difficult to turn a profit. You’ll need to invest in marketing and sales efforts to bring down your CAC. On the other hand, if your CAC is low, you may be able to grow your business more quickly.
Keep in mind that you want your CAC to be lower than your customer lifetime value (CLV). CLV is the amount of money a customer spends with your company over the course of their relationship with you. You can calculate CLV using this formula:
sales and marketing expenses ÷ total number of clients = CLV
