One of the most important metrics for optimizing a company's financial processes is customer acquisition cost. Also known as CAC, this indicator is essential for defining not only the effectiveness of a company's marketing department, but also for understanding how to be more profitable, how to analyze and optimize its processes.
Do you know what CAC is and how to measure it? Stay with us and understand why this indicator is so important to evaluate your business strategy:
What is Customer Acquisition Cost (CAC)
As the name suggests, CAC is a metric that measures a company's customer acquisition cost. This indicator is essential for companies that work in segments that require loyal customers, such as SaaS companies or B2B companies, but it is also very relevant for other companies.
The purpose of CAC is to allow company managers to measure how much it currently costs to acquire a customer. In addition to helping understand the peru mobile database effectiveness of the company's current marketing campaigns, CAC also allows mapping its financial health. But how do you calculate it?
How to calculate CAC
The formula for calculating CAC is very simple, but its components can be quite complex. After all, the cost of acquiring customers is defined by dividing all the investment directed towards acquiring new customers by the number of customers acquired during the same period. Note:
CAC = Total investment for customer acquisition / Customers acquired
Let's look at a practical example: imagine a psychologist's office that hires a marketing team made up of 3 people, each with a salary of R$3,000. In addition to this amount, the team has a budget of R$5,000 per month to attract new clients for the therapists. In 6 months, the team has acquired 66 new clients for the office. What is the CAC of this office?
The first step is to calculate the total investment in these 6 months. Each month, the marketing team spends R$9,000 on salaries (3 employees at R$3,000 each) and R$5,000 on budget, totaling R$14,000. In these 6 months, the total spent was R$84,000. In total, 66 customers were generated, so the CAC can be calculated as follows:
CAC: 84000 / 66 = R$ 1272.73
Basically, the practice invested R$1,272.73 for each client acquired!
Understanding CAC
You saw in the previous example that our fictitious company invested R$1,272.73 per customer acquired. But is this value good or bad?
Analyzing the quality of this result depends on another metric , the Lifetime Value (LTV). This metric basically measures the value that a customer will generate for a company throughout the relationship between them.
Now, let's assume that each of those 50 clients has a maintenance cost of R$60.00 per consultation, and each consultation has a value of R$120.00. On average, patients follow the practice for 3 years. This means that, annually, each client acquired generates a profit of R$3,120.00.
Over an average of 3 years, each patient generates R$9,360.00. Compared to CAC, the business is worth it, isn't it? After all, each client cost R$1,272.00 and generated more than 7 times the return!
Therefore, for the company to be able to analyze this data accurately, CAC should always be accompanied by LTV. This will optimize your processes and allow you to analyze what needs to be cut to reduce CAC, or what type of customers you need to increase LTV.