#1 - Customer Acquisition Cost
Customer Acquisition Cost (also known as CAC) covers all your investments to get new customers. It is mandatory to understand, that active and passive investments add up to bring in fresh customers consistently. Active investments usually represent the sales effort directly, like sales rep, tools and infrastructure that finalize the transactions. Passive investments are there to support, facilitate, help each sale in the entire process, like WordPress domain, landing pages and whatever specific you need do for your "active" part in marketing.
How to calculate Customer Acquisition Cost? Divide marketing + sales costs with the total of new customers acquired, within a specific period. To better calculate Customer Acquisition Cost (CAC), consider overall costs from marketing and sales, including marketing efforts, promos, campaigns, and sales activities. Make sure you assign usually ignored costs linked to customer acquisition, such as WordPress, related infrastructure and license costs, plus involved team salaries.
Why track Customer Acquisition Cost? Because budgeting and scaling needs this. When you have your formula: "total acquisition costs per new customers", you’ll understand how to improve your marketing, partnerships, investments, and overall brand performance. You also notice when things start to unravel. The sooner you realize this new reality, the better.
How to improve Customer Acquisition Cost? Monitor and compare CAC trough content formats, channels, and campaigns. Identify the most cost-effective sources of new customers. Refine how each content segment resonates with your target audience and conversions. Review your CAC investments monthly, to identify trends, understand what’s working. This is a must: adjust or adapt your strategy for upcoming holiday and events related to your targeted audience.
#2 - Cost Per Lead
Cost Per Lead (also known as CPL) compares what strategy performs better and on what platforms, channels. While I don't want to distract you, just mentioning: Retention and Lifetime Value for these leads are also important.
How to calculate Cost Per Lead? Divide your total investment spend (creation, distribution, promotion) by the number of leads generated within a specific period. To better calculate Cost Per Lead (CPL), compare CPL to metrics like click-through and conversion rates. These identify bottlenecks in your funnel.
How to improve Cost Per Lead? To better calculate CPL, compare with metrics like CTR (click-through) and conversion rates. These identify bottlenecks in your funnel. Based on these information, optimize your strategy to generate MORE leads: invest MORE in high-quality content, refine MORE low-performing areas, and prioritize formats that convert MORE efficiently.
#3 - Monthly Recurring Revenue
Monthly Recurring Revenue (also known as MRR) shows the extra money your business makes from upsells, cross-sells, and add-ons from your existing customers. Simply put, MRR represents the amount EXTRA revenue you can anticipate, each month, from current customers.
How to calculate Monthly Recurring Revenue? Multiply the total number of ACTIVE customers with the average revenue per customer. Make sure that here you only use recurring payments. One time payments are not present in this calculation, like: setup and installation costs, consulting and professional service fees
How to improve Monthly Recurring Revenue? Define what makes your customers to spend more. Like exclusive, unique, or seasonal content offers, personalized recommendations, or strategic pricing models. This info will help you and your team repeat previous success and refine future efforts.
