What is Customer Acquisition Cost? Why Does it Matter?

Apr 4, 2022 | Marketing

Marketing Blog

​As a business owner, how do you determine the price of a new customer? Between marketing campaigns, events, advertising, and referrals, what are you spending on each new client? And more importantly – how can you reduce that cost to get more customers for less? If you’re guessing or want to know how to make changes that can increase your profits, you need to determine your customer acquisition cost and how it affects your bottom line. Let’s dig in.

How Do You Measure Customer Acquisition Cost?

First things first. Customer acquisition can be calculated in what’s known as the customer acquisition cost (CAC). It’s important because it assigns a real value to your marketing efforts and helps accurately measure the ROI for your business. The formula for customer acquisition cost (CAC) is the marketing cost (MC) divided by the number of customers acquired (CA):


Simple, right? Even those of us who aren’t math majors can handle that. Depending on how you manage your marketing, consider including wages for marketing and sales, outsourced services, overhead for marketing and sales, and other expenses your business has when determining customer acquisition cost.

How Can You Minimize Your Customer Acquisition Cost?

Remember – you can always do better! No matter how well your business is doing, there is always room for improvement. How? By improving messaging, connecting with new audiences, and trying new avenues for marketing.

Make Your Website Work for You.

Take a good hard look at your website. Are your call-to-actions effective? Is your website mobile and tablet responsive? Do your landing pages make sense and encourage people to connect with you? Is your copy clear and make sense to the reader? Make the experience as simple as possible and your consumers will thank you.

Don’t Neglect Current Customers

Your clients are your key to success, so focus on them too. As discussed before, it costs five times more to acquire a new customer than it does to obtain a new one. There are many simple strategies to keep your clients focused on our business and increase employee retention. Plus, it will decrease your overall cost of customer acquisition.

Outsource Your Customer Acquisition

Get the most bang for your buck. If you want to reduce your customer acquisition cost, most businesses find that outsourcing is their best option. Consider the advantages of having a customer acquisition team doing all the tedious and consuming research, implementation, and metrics tracking for you. Plus, there are many other benefits to outsourcing your customer acquisition – like achieving consistent ROI, generating clear customer data, minimizing your customer acquisition costs, and more.

Check out 5 Customer Acquisition Strategies You Can Leverage This Year

The Bottom Line

Your customer acquisition cost is the heartbeat of your company. Reducing your CAC can mean higher revenues and greater profitability. If that solution is outsourcing your customer acquisition needs to a professional firm, LeadingResponse is here to help. With over 25 years of experience, we can help set your business on a path to success. Our marketing experts are always available to provide free consultations on the best solutions for your business. Let’s get started.

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