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Analyze your customer acquisition cost

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1. Sum sales and marketing costs over a three month timeframe.

Consider costs such as:

  • Program and marketing spend
  • Overhead associated with attracting and converting new leads
  • Creative costs
  • Cost of all tools used
  • Salaries of the marketing and sales teams
  • Commissions and bonuses
  • Referral costs
  • Overhead costs
  • Product and support costs for any freemium offering used as an acquisition tool
  • Tools like Insivia and Web FX can help you calculate your marketing spend.
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2. Use tools like GA, HubSpot, and SalesForce to determine the number of new customers acquired in that same three month period across channels.

Get full visibility into your sales,  and analyze leads per channel, qualified leads and time to conversion with these tools:

  • HubSpot Sales is a powerful sales CRM tool that includes reporting and analytic tools that lets you manage your pipeline more effectively.
  • Salesforce is a CRM tool that covers all aspects of business, including sales collaboration and leads management.
  • Freshworks CRM offers visual pipeline, deals, contacts and lead management functions.
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3. Divide total sales and marketing costs by total number of customers acquired over the same period, to calculate customer acquisition cost during that period.

This will be a blended CAC across channels. Here’s the formula to estimate your customer acquisition cost:

CAC = (total marketing expenses and sales for a given period) / (number of customers acquired in that period)
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4. Track per channel costs and set up Google Analytics Goals to examine your CAC across various channels.

Go to Google Analytics hen click Admin. Click on the Goals in the View column to set up your goals. Tap New Goal or Import from gallery to set up a new goal. You can also open an existing goal to edit its configuration, then:

  1. Select a template from the list and click Next step.
  2. Click Custom > Goal Type > Next step and;
  3. Use Destination as Goal Type to treat screenview or pageview as conversion.
  4. Use Event as Goal Type to treat user interaction with your app or site as a conversion.
  5. Add Goal Details to track your customer acquisition cost as a goal and Save.
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5. Click Behavior > Site Content > Landing Pages to see the pages that drive the most goal conversions.

Drill down into different metrics that lead to customer acquisition:

  • Acquisition Metrics to analyze traffic volume.
  • Behavior Metrics to examine traffic quality.
  • Conversions Metrics to assess landing pages that drive the most qualified leads.
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6. Go to Acquisition > All Traffic > Channels to view channels and analyze those driving the most goal conversions.

Channels include organic search, referrals, direct, social media, paid search, email, and other ads.

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7. Analyze historical average of marketing expenses and an average of CAC over the same period to project the future.

Use CAC to estimate future performance in your financial model.

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Current Playbook:

Analyze your customer acquisition cost

Sep 08, 2021

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