How to Calculate Customer Acquisition Cost

Calculate customer acquisition cost by tracking marketing program costs.

Tracking clicks and downloads is great but, if you want to know your Customer Acquisition Cost, then you need to track marketing costs.

This does not need to be difficult to do, but many companies avoid it. Usually, this is due to any of three reasons:

Inertia.
This is a common one – the marketing team knows the benefits of tracking costs; they just never get around to it. It’s not hard to see how this could happen: a small, overworked team is going to be inundated with fires to put out. Setting up a whole new system takes resources they cannot spare.

They don’t know how.
Many marketing teams have heard about CAC and KPIs but they don’t know how to get started tracking them. It gets put off on a wish list and never looked at again.

They never thought of it.
Tracking marketing costs is a trending topic now, but it hasn’t yet hit the mainstream. That means a lot of companies have not heard of it. Even if they have, it’s not something that they think of in regards to their own plans.

Marketing automation can help.

More and more marketing automation vendors are offering some kind of cost or revenue tracking. This is a great feature but you don’t have to use those systems in order to track your marketing costs. A simple spreadsheet is all you need.

It doesn’t have to be complicated. In fact, simple is good – it makes it easier to get started, and can make it easier to interpret your data.

You can track costs for all your marketing programs or, if you prefer, just a few of the most important ones. You can include overhead costs or leave them out, depending on how precise you want your data to be.

Remember, keep it simple. Don’t try to tackle so much that you freeze up and do nothing. Try for little successes to start, like tracking all the costs and revenue from your most important trade show. Or from an ad campaign.

Track your costs by program.

Programs can be anything from content marketing on your website to a specific white paper promotion. It can mean a trade show or a social media campaign.

Whatever programs you have, think about all the costs that go into each of them. Were their advertising costs? Printing costs? Did you hire a graphic designer or content writer? Did you buy branded promotional items or get a new booth? This Customer Acquisition Cost Tracking Sheet makes it easy.

Track which programs led to a sale.

Every company knows when they get a new customer – but they may not know where that customer came from. If you want to track the impact of your programs, you need to find that out.

Granted, just tracking program costs can give you a lot of useful information. But, if you really want to know which programs lead to customers, you need to track that, too.

As with costs, some automation systems do that for you. However, if you do not have access to a system like that, there are some easy workarounds.

The easiest way is to create a custom field for each of your programs and have that field set to “Yes” whenever a customer passes through it. So, if they download a white paper, the White Paper Program Field would automatically be set to “Yes”. If they visit your booth at a trade show, the Trade Show Program Field would be updated to “Yes”. This can be automated in many cases but, especially regarding live events, may need to be updated manually. If some of your programs recur annually, you will need to decide whether you need a separate field for each year or if a simple Yes/No will suffice, regardless of date.

Another option, if you are not able to create custom fields or if you intend to track only a limited number of programs, is to simply update the Notes section on each customer. Most CRMs have a “Notes” or “Description” field that you can use for this purpose. This would have to be maintained manually and you would have to pull up the information manually when you wanted to use it, but it’s a possibility.

Pull It All together

In the end, you will be able to easily determine which programs cost more and which lead to more sales. From there, you can do a simple ratio to determine Customer Acquisition Cost for each of your marketing programs. Use this easy Customer Acquisition Cost Tracking Sheet to get started.