Acquisition cost denotes the sum expended on acquiring fixed assets, covering expenses associated with gaining a new customer, or facilitating the acquisition of a competitor.
For example, to reach an ever-growing audience, companies regularly invest in actions to acquire new customers. This can involve anything from digital marketing advertising campaigns to trade show participation.
However, to know whether these actions are profitable, it's important to analyze their profitability and return on investment. This is precisely where acquisition cost comes in.
In this case, acquisition cost is used to determine the average amount a business has to spend to obtain a new customer. Its purpose is to determine whether or not investing in such an approach is profitable.
To calculate it, simply divide the total amount invested in each campaign by the number of customers obtained as a result.
The idea is to list all the money invested in marketing and sales actions to win a customer.
The cost of acquisition can be calculated globally, over a given period. It’s also very interesting to compare it with the customer's lifetime value.
However, it can also be evaluated on an individual basis, for each campaign or each channel, so as to get a more precise idea of the profitability of the sums invested.
In a constant quest for profitability, every company must seek to optimize its customer acquisition cost (or CAC) and implement relevant KPIs. The aim is to minimize acquisition costs while increasing the return on investment of each action.
To achieve this, it's essential to take the time to implement a precise strategy, which can be adapted to suit the product or target in question, for better conversion.
To reduce acquisition costs, every entrepreneur needs to be constantly on the lookout, so as to activate all the levers needed to reduce costs, while continuing to increase sales volume and results.
