How does business activity monitoring and controlling assist you in achieving your revenue targets?
Revenue is the main value driver of any early-stage startup. It is therefore crucial that you achieve your objectives there…
The cost of acquiring a new customer is referred to as customer acquisition cost (CAC), an important metric that demonstrates the scalability of your business to investors and stakeholders.
The formula to calculate your CAC is TCSM / NCA = CAC,
where
Let’s look at an example to see how the formula works: if you spent $10,000 on marketing & sales and acquired 100 customers, the CAC would be $100. In the above example, the formula would be TCSM ($10,000) / CA (100) = CAC ($100).
The main drivers of your CAC are as follows and should be observed to find optimization potential,
You can extract relevant information from the above drivers that you can use to optimise your customer acquisition costs. However, CAC alone cannot define your company’s scalability but the ratio of CAC to customer lifetime value (CLV) does. In the next article, we will cover the CLV:CAC ratio.