Customer Acquisition Cost: What is it, and why is it important?

Customer Acquisition Cost: What is it, and why is it important?


If a business wants to gain customers, it must first acquire leads. Following that, a business nurtures its leads until they become customers. The whole process can be challenging if you don’t know what you’re doing. 


To get leads, you frequently have to invest both time and money. What does it cost your business to get a lead, though? As a business, you must understand your cost-per-lead, also known as the customer acquisition cost. Cost-per-lead varies by industry, so it is important that yours be comparable to the standard rate in yours.


The concept of customer relationship management (CRM) doesn’t have to be complicated. If you’re generating leads using a cloud-based tool like Salesforce, you might wonder how to evaluate their success. For marketers, this question is not new “How to get more ROI out of leads” they constantly work to improve ROI from the leads for whom they have spent quite a few bucks.


You can calculate the ROI of your leads using Salesforce and supporting tools like Pardot, regardless of the campaign they were generated from.


Let’s first understand what customer acquisition cost means.

Customer Acquisition Cost (CAC) is the money required to acquire a new customer. The CAC is calculated by dividing the total cost of acquiring customers by the number of customers. To understand how much money you’re spending to acquire customers, CAC is a great metric to monitor. If your CAC is excessively high, you should reconsider your customer acquisition strategy.


Why is CAC so important?

Knowing how much a customer now costs to your organisation can provide you with excellent tools for forecasting how much they will cost you in the following months. Building and maintaining an accurate and reliable CAC is critical for long-term development. If you are already using Salesforce CRM, then integrating Communicat-O with your CRM will make your task easier for developing an accurate CAC metric. 


This metric is critical because it allows you to determine how valuable a customer is to your business. It also aids in calculating the ROI of an acquisition. You must understand each client’s value to determine how much of its resources should be spent on a customer to be successful.


How You Can Improve Your Customer Acquisition Cost

To reduce your CAC, focus on converting leads and prospects into paying customers, increasing the value consumers receive, and staying connected with your audience through a customer relationship management platform. Communicat-O is a third-party application for your Salesforce CRM, through which you remain connected with your clients as it integrates all the communications into one unified inbox, making it possible for you to look into and respond to every customer query.


Use lead generation software.

The benefit of lead-generating software is that it may assist you in gathering information at a point of interaction with your company, such as a homepage visit, email open rate, etc. Knowing when and how your consumers connect with your business online helps you to establish a better customer experience and assists your sales team in focusing on well-qualified prospects while automatically nurturing others.


By scoring and qualifying leads to display the most crucial leads for follow-up, Communicat-O will help you to reduce the time wasted on manually generating and researching the leads. 21% of the time that B2B sales representatives spend is on lead generation. That is approximately 2.5 months in a working year. 


Start Utilizing Marketing Automation

If you aren’t utilising marketing automation software, you should start immediately. These technologies help with lead creation, analysis and reporting, email targeting, and other tasks. Automation reduces the amount of human input required. You can effortlessly automate your marketing with Communicat-O; its bots are powered by AI and are designed human-friendly. By automating tasks and reducing human input, you will cut costs and free up time for your team to focus on complex and productive tasks.


Lead generation budget

Before embarking on a marketing campaign, planning a lead acquisition budget is critical. First, it assists you in focusing on your best channels and expenditure. And secondly, when you are spending more than you had planned, you may simply make cuts. Marketing should account for about 5-8% of your company’s expenditure. If you’re exceeding that, try to rely on organic traffic and content more, explore less expensive marketing channels, and better target potential buyers to bring down your CAC.


Return on Investment

Your ROI is calculated by dividing your LTV by your CAC. LTV is the total amount of money a customer is projected to spend in your company or on your products throughout their lifetime. Once you know how much it takes to acquire a client and how much that customer delivers you throughout their relationship, you can calculate how much each dollar of ad expenditure brings in as profit.



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