Doing calculations can be simple, but interpreting these calculations to understand how to proceed is the difficult part. CAC is a simple and very efficient way to understand how your customer acquisition is going and what needs improvement.
Therefore, understanding what it is indicating about your company is essential. See what information this simple calculation can show you.
Profitability
To be profitable, the amount spent on customer acquisition must be less than the amount spent on manufacturing or building the product or service. If your CAC is higher than these expenses, even if you are making profits, you need to review your marketing.
To interpret CAC, you also need to evaluate which customers return to your business and make other purchases. A returning customer is very valuable and highlights the efficiency of the strategy by which they were acquired.
Marketing Efficiency
By interpreting CAC, you can measure which marketing strategies work best for your business. Thus, it is ideal to test them within the period you have set for performing the calculations.
Sometimes, it is not necessary to make major changes, but small adjustments that will be tested periodically. In this way, marketing strategies will receive a quantitative analysis.
Compare with the Market
Study how other companies usually deal with CAC, which strategies have worked better for them. This way, you can learn from the mistakes and successes of others.
However, remember that each company has its own challenges. Set your own goals regarding the results you want to achieve.
Discover the Source of the Customer
A company can use various marketing and sales strategies. Some will prove more favorable than others, and this is very relevant information that is obtained through CAC interpretation.
You can also divide your CAC by the strategies used and invest more in those that prove to be more efficient. In this way, you will conduct more targeted marketing that will yield better results.
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