There’s one metric every head marketer needs to know, but few actually do.
If you’re a marketer manager or leader: get to grips with it, understand it, communicate it.
If you’re the CEO/Founder: ask for it, understand it, know it.
Once you know this metric, you’ll realise how central it is to many of your other metrics and KPIs.
You can use this metric to drive results and to monitor and understand performance.
It’s your Customer Acquisition Cost – CAC
Quite simply, CAC is defined as “the total cost related to acquiring a new customer“.
How to calculate your CAC:It’s not as easy as it sounds.
Your CAC requires totalling all sales and marketing costs over a given period of time, divided by the number of customers acquired in that time.
Sales and marketing costs include:
- media/advertising spend
- agency/creative costs
- sales incentives
- sales and marketing salaries, commissions, bonuses and associated employment taxes
- tech and SaaS overheads – including CRM licenses, digital marketing platforms
This could be a scary figure..
CAC = (£sales+£marketing) / #customersHere’s a worked example of how to calculate CAC:
MySaaS-co employs 1 marketer (£75,000 total employment cost)
They have 2 sales people (£250,000 total employment cost).
They work with an agency who charges £1,300 per month (£15,600 per year)
They spend around £3,000 per month on PPC advertising (£36,000 per year)
Other marketing costs (trade shows, award entries etc) come to £35,000
Tech overheads cost £8,000
And they take on 900 new customers in a year
Sales & marketing cost = £418,600
Divided by 900 new customers = £466 Customer Acquisition Cost
Now you know your CAC, there are multiple ways to use it.
Find out more here:
https://fractionalcmo.uk/customer-acquisition-cost-cac/
