This means that the company spends on average €100 to acquire a new customer.
Of course, tracking CAC over time is critical to identifying trends and making informed decisions about marketing and sales strategies, specifically:
Optimize marketing spend
Refocus marketing efforts in real time to maximize return on investment
The Average Cart and Customer Lifetime Value
In the example we saw, the furniture company spends an average of €100 to acquire a new customer. But how can we evaluate whether the Acquisition Cost is high, average or low?
When evaluating the profitability of a marketing campaign, the Customer Acquisition Cost represents only part of the answer. The Customer Acquisition Cost must in fact be compared with two different factors, the first of which is the revenue generated by each customer, i.e. the value of the average cart . For example, returning to our example, a CAC of €100 may seem high, but it is completely justified if we consider that the company’s basic product has a cost of €1,000.
In addition to the Customer Acquisition
Cost and technical seo articles on saas the average cart, it is essential to consider another crucial indicator: the Customer Lifetime Value (CLV) . The CLV represents the total revenue that a customer will generate for the company during the entire duration of the commercial relationship .
Lifetime Value is a complex indicator that name and phone number search integrates several parameters, including:
The average duration of the business relationship
The loyalty rate
The average amount spent by each customer
The profit margin per customer
The gross margin
These factors can vary greatly depending on asia email list the industry and the nature of the products or services being sold . For example, a customer at a grocery store will make more frequent purchases than a customer at a car dealership, but the latter will spend more in a shorter period of time.
The relationship between Customer Acquisition Cost and Customer Lifetime Value
To determine whether a company has an economically sustainable Customer Acquisition Cost, it is necessary to compare it with the Customer Lifetime Value , or the overall value that a company can obtain from a single customer during the entire period of their commercial relationship.
In terms of investment sustainability, certifying the effectiveness of your customer acquisition strategies is a fundamental step for companies. Here is a series of tips to optimize the CAC and thus maximize the return on marketing investment.
1. Define your target market and understand your ideal customer
By understanding your customers’ needs, behaviors, and preferences, you can focus your acquisition efforts on people who are more likely to convert, thereby reducing your CAC. You can use demographic, psychographic, and historical data to create detailed customer profiles and target your campaigns to your ideal audience.