Customer Acquisition Cost (CAC) Calculator. Estimate How Much It Costs To Acquire One Customer

CAC is often estimated alongside the customer’s lifetime value (LTV). LTV estimates the total revenue one customer brings throughout their relationship with your business. The ratio between these metrics shows how profitably a business works. 

To get your CAC, you need to divide the amount spent on customer acquisition by the number of customers you have. Calculate your customer acquisition cost in our CAC calculator below.

Other aspects that affect the rate

Your business’ CAC can be higher or lower depending on these factors:

• Company age and industry. Newer companies and those entering a new market will naturally have a higher CAC since they’re just starting out. Plus, some industries are more competitive than others which can also rank up the acquisition costs. 
• Marketing channels. The cost per advertisement can differ from one platform to another. That’s why it’s a good idea to calculate CAC for each marketing channel separately and compare their effectiveness.
• Sales process. It’s beneficial to evaluate CAC in connection with the average sales cycle length. For example, if your sales cycle is longer than a month, a month-to-month CAC estimation won’t be telling. In that case, it’s best to analyze an average CAC for 3 months or half a year.
• Target market. If your business operates on a subscription model, a higher CAC is not that alarming. The acquisition may cost you more than the monthly amount of money you get from that person, but the payments are recurring, so it’s actually a normal situation.

Best tips to improve your CAC

If your CAC is higher than you’d like, here are some strategies to improve it.

First of all, examine your marketing campaigns and advertising. They need to clearly show the value of your products or services. If customers can understand the benefit they’ll get from your business right away, they can make the purchase faster.

Investing in customer relationships can help too. Make customer experience a priority and engage with leads offering personal communications. Another strategy is to request referrals. This way your existing customers can bring in the new ones practically for free.

Don’t ignore customer feedback. Ask your customers to leave reviews, send out surveys, or conduct interviews. This way you’ll learn your business’ strengths and weak points and then act on your findings.

Meet leads where they are: maybe your customers expect digital experiences you don’t offer yet. For example, younger people might opt out of a marketing offer if they need to make a call to get it.

Conclusion

Now that you know how to calculate CAC, monitor the rate regularly. Seeing it in dynamic helps to determine which areas need to be focused on more, what works well, and what doesn’t. 

To get the most out of your analytics, monitor other metrics as well. To do so, check out our other services:

• ROI calculator
• LTV calculator