How to Calculate Customer Acquisition Cost

There are numerous reasons why you may be interested in finding out how much it costs your business on average, to acquire a brand new customer or client. To discover how to calculate customer acquisition cost, simply continue reading.

How to calculate customer acquisition cost: An effective step by step guide

The key reasons to try to work out your average customer acquisition cost:

There are a few key reasons to work out your average customer acquisition cost, in order to help your business grow to its full potential and to increase your business’ market share.

For example, you may want to figure out your average customer acquisition cost so that you can figure out whether acquiring brand new customers is an expensive task and you should focus your efforts on retaining as many of your customers as possible. As it’s relatively easy to increase your business’ retention rate by using focused marketing techniques such as customized emails to customers who have already placed an order with your business in the past. Alternatively, you may want to calculate your average customer acquisition cost in order to theorize whether your current marketing techniques are effective or whether you should adopt new marketing strategies in order to become more successful in acquiring new customers. As new customers are essential to the healthy, short term and long term growth of your growing business.

How to calculate customer acquisition cost:

Your very first step should be to decide the period that you’d like to look at. In most cases, you are likely to want to know your yearly customer acquisition cost or your customer acquisition cost for a specific marketing campaign. Both of which are valuable stats that you’ll easily be able to use to help grow your business and your business’ market share.

If you want to go ahead and start off by figuring out your yearly average customer acquisition cost, you’ll need to add up all of your sales related costs and your marketing related costs. Some examples of some of these costs may include Facebook marketing costs and the salaries or hourly rates of sales team members who your business employs. In order to get an accurate amount it’s important to carefully look at all of your sales and marketing costs, in order to avoid failing to include large costs that you may not at first deem as sales or marketing costs.

Once you think that you have an accurate total of sales costs and marketing costs, you should research how many new customers your business has managed to acquire in the past year. A task that may be much simpler if your business only exists online as you’ll be able to easily check your sales stats to find out how many new customers you acquired in the past 12 months. Now simply divide your sales and marketing costs by your new customers, to find out your customer acquisition cost.

So if you are interested in finding out your customer acquisition cost, it’s a great idea to use the simple formula above in order to get started. As it’s a simple, straight forward formula. And if you want to read about celebrities and business, click here!