• The 5 Marketing Metrics that Calculate Customer Acquisition Cost

    You know by now that your customer acquisition cost (CAC) is simply how much you spend to convert a lead to a customer. But there’s nothing easy – or inexpensive – about achieving that conversion. In fact, it costs at least 6 to 7 times more to acquire a new customer than to retain an old one. Any business serious about growth knows it must acquire new customers if it wants to increase revenue and replace customers lost to competitors.

    Calculating Customer Acquisition Cost

    CAC is calculated by simply dividing the costs spent to acquire new customers by the number of customers acquired. While there are exceptions and caveats to which metrics matter to your B2B business, these are the metrics that influence most companies’ CAC.

    Market Research

    Market research costs are everything you spend to identify qualified prospects who are right for your business. They can include internal or independent research, the purchase of published reports, online investigation of competitors, and purchasing or renting mailing lists that are relevant to your target market.

    Lead Generation

    Look to your sales and marketing teams to determine your lead generation costs. Many fail to recognize that there’s more to this important metric than meets the eye. In addition to what an actual campaign costs, you must include wages associated with the two teams, the cost of marketing and sales software, and any additional professional marketing services, such as consultants.

    Prospect Follow-Up

    Lead nurturing is how you develop relationships with buyers at every stage of the sales funnel. The importance of effective lead nurturing tactics cannot be overstated. If you want to actively move prospects toward becoming loyal, paying customers, a combination of targeted content, multi-channel nurturing, timely follow-ups, and personalization are critical to your success.

    Direct Sales

    If you’re looking to convert leads to customers, you must designate which members of your sales team will focus on new business. In addition to salaries, additional expenses for direct sales often include travel expenses, presentation costs, and incentive or bonus programs.

    How to Improve CAC

    Now, take the above costs and divide them by the total number of your new clients. Are you happy with your customer acquisition cost? Does it support the lifetime value (LTV) of that client? Far too often the answer is no; most companies think they’re spending too much on customer acquisition.

    There are several ways to improve your CAC. You can work to improve on-site conversions and campaign messaging as well as focus on customers with the best LTV:CAC ratio while exploring new channels.

    Another solution is to ally your B2B company with a high-quality lead development and sales partner who supports your efforts to generate new leads and increase revenue while keeping customer acquisition costs minimal.

    Invenio Solutions can help you expand your sales reach and achieve your CAC and market share goals in record time. Our experienced Sales Scientists are skilled in determining which strategy is best suited to generate leads and close deals for your business. And our Science of Sales™ can generate the results you need. To learn more about CAC and the services we offer, contact us today.

     

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