How we calculate the cost of customer acquisition at Angry Ventures

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At Angry Ventures, one of the metrics we value most when we are iterating a product is Customer Acquisition Cost (CAC).
Why is this metric very important to us? Because the product needs to make a profit and needs to have a ROI (Return on Investment) associated with each customer in the marketing and sales process. This helps us understand which marketing and sales channels we should or should not iterate on.
This concept of CAC is very simple: “how much money am I spending to acquire a customer?”
How can we get it? Simple… by dividing the total associated costs by the number of customers acquired in a specific period of time.
Formula for calculating “Customer Acquisition Cost”:
Description of each variable:
CAC – Customer acquisition cost
CTMS – Total marketing and associated sales costs
TCA – Total customers acquired
The formula presented above is the general one. We usually use, and because it is simpler, a more detailed formula, which better translates the CTMS (Total Cost of Marketing and Associated Sales).
Angry Formula to calculate the “Cost of Customer Acquisition”:
Description of each variable:
CAC – Customer acquisition cost
S – Salaries of the marketing and sales team during the specific time period of the campaign
P – Platforms used (Ex: E-mail marketing app, Hootsuite, Buffer, SproutSocial, MOZ, etc)
CM – Cost of associated marketing campaigns
R – Resources of designers, consultants, etc.
O – Other marketing and sales related costs (e.g. travel, phone calls, etc…)
TCA – Total customers acquired
Easy peasy, right?

Improving this metric, CAC, has helped us improve the quality and higher ROI of communication channels between our value proposition and our customer segment. Things like creating persona-specific lists, targeting our campaigns specifically, and testing new channels are great for a CAC in line with what we want.

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