Formula for calculating the cost of attracting a client

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You have launched two mechanics on the site. The goal of the first is to register in the service, the second is to buy a monthly subscription. The cost of each user attracted by the first campaign is CPA (they performed an action, but you did not receive money). The cost of each person attracted by the second campaign is CAC (each new client paid for the subscription).

Simply put, CPA is about the target action, and CAC is about the payment.

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What is a good CAC and how to calculate it
How good a CAC score is varies from company to company.

To measure SAS, use the formula:

Estimating the cost of customer acquisition can be done by comparing it to another metric, lifetime value ( LTV ). This is a forecast of how much gross profit a customer will bring in during their lifetime as a buyer.

In theory, the CAC to LTV ratio can tell you whether a business is paying list of switzerland cell phone number too much to acquire customers. It is generally believed that if CAC is greater than LTV, the business is not profitable.

In practice, everything is more complicated - there is no optimal CAC value for everyone, and even the CAC to LTV ratio needs to be assessed taking into account the company's expenses and the specifics of the business. The more administrative expenses, the lower the CAC should be in relation to LTV for the company to come out on top. The specifics of the business, which are also important to consider, are marginality, the number of repeat sales and the sales cycle.

For example, for an IT service startup without employees, it is enough if the CAC is slightly less than the LTV. That is, the costs of attracting a client will pay off and there will be a small profit, because there are no other costs.

How CDP and Marketing Automation Help Reduce CAC
Implementing a customer data platform ( CDP ) and marketing automation will help you get closer to users: know more about them and build personalized communications. This will significantly shorten the user's path to purchase.

Also, based on data about website visitors, autofunnels are created that independently engage users in dialogue, convert them into clients and reduce employee costs.

The main benefits of using CDP: