We recently told you at Webmefy how to improve the conversion rates of your marketing campaigns and this time we want to focus on the cost of bringing a new customer to your online store. Because this data is vitally important to be able to calculate whether our business is profitable or not and to know if our marketing campaigns are achieving their purpose. To calculate the acquisition cost per customer, a formula is necessary that we will develop below, so we recommend that you continue reading if you want your business to be as profitable as possible.

Acquisition cost and customer life cycle

It is vital that you know how much it costs you to bring each customer to your online store. With this information you will be able to adjust your marketing campaigns much better so as not to waste money and to influence what your business really needs. In this way, once you know the acquisition cost of each customer you will be able to:

• Define your ideal client : if the cost is very high, perhaps you have not yet identified your target client well and that is why it costs you so much money.
• Determine the success of a campaign : it is the parameter you need to know if a campaign is being profitable or not.
• Know the most profitable channels : the channels in which the cost per customer is lowest are the ones to bet on.

The acquisition cost of each customer is known by the acronym CAC (Customer Acquisition Cost) and is defined as the total cost that a company has allocated to attracting customers, divided by the total sum of customers obtained. This cost includes salaries, hiring of external personnel, advertising expenses, supplies...

For its part, the life cycle of a customer is a term that determines the income generated by a customer during the time they are interacting with our company. Within this term the following phases are also included: acquisition, conversion, growth, retention and reactivation.

The relationship between acquisition cost and life cycle

At this point, the reader will have already deduced that, for a business to be profitable, the cost of acquiring a customer must be less than the life cycle. If this is not the case, it is necessary to rethink the entire marketing strategy, since we are generating a loss of activity. It is considered an optimal ratio that the acquisition cost of each customer is approximately 10% of the life cycle.

How is the acquisition cost calculated for each customer?

First of all, we must make a calculation of all the costs generated by the customer acquisition strategy. A sum of the salary of the marketing department staff, the specific SEO expert, the Google and Facebook Ads expert, advertising spending, and email marketing and CRM software. Once we have identified and added all these expenses, we must calculate how many clients the company has achieved thanks to this strategy. Once we have found the number, we will simply have to divide the total cost by the number of customers obtained to obtain the acquisition cost for each customer in our online store.
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