Your Simple Guide to Understanding and Calculating CAC
Before you can even begin to think about what it takes to be a successful online business, you need to seriously invest in a sound strategy that will be able to drive customers to your site and, once they are there, keep them there.
Being able to acquire the right sort of customers to your site is where it all begins, and the foundation of this starts with understanding what customer acquisition really is.
From there, learning how to calculate your customer acquisition cost and mastering the process will enable you to run your CAC processes smoothly, quickly and easily, gaining new customers at a regular frequency, and growing your business exponentially.
Understanding CAC
Before you can calculate your CAC, you need to understand what CAC actually is. Essentially, CAC is a metric that is used by virtually every business, online or offline, to help grow their share of their specific market.
CAC stands for Customer Acquisition Cost and it is a useful way for businesses to understand how much it will cost them to acquire new customers to their brand or their set of services. Acquisition cost determines the cost of each new customer gained and it can be useful in determining whether or not a current CAC strategy is working well, or costing your business too much.
Calculating CAC
Calculating customer acquisition cost begins with setting a specific period of time. This is usually a month, a quarter, or an entire year. Setting a timeframe will help you to narrow the focus of your CAC data.
Next, you’ll need to add the total cost of your marketing for that period, with your total sales expenses. Divide this number by the total number of new customers that you managed to acquire during that period.
The number that you arrive at is how much it has cost you to acquire each new customer during that time period.
Value
Now that you know how much your players cost to acquire, you can see how valuable it is to keep them. For any retention or reactivation activity, Enteractive offers the leading service in bringing customers back to your site, through one-to-one personalised conversations. To find out more, contact our Business Development Director, Andrew Foster at andrew.foster@enteractive.se
For more insights into Customer Acquisition Costs, read How to calculate customer acquisition cost
