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Learn what is acquisition cost and its importance

December 15, 2020

Among the various metrics evaluated in mobile marketing are those that point to the expenses made to acquire new customers, such as team salary and paid campaigns, for example. To do this, you need to know what is acquisition cost.

If you want to be more clear about how much it costs to acquire each of your customers, but don’t know how to do it, check out the unique content RankMyAPP has prepared on the subject. Also, understand the importance of having this data at hand.

What is CAC

CAC stands for Customer Acquisition Cost. This is one of the most important metrics in mobile marketing, as it measures what investment it takes to attract each of your app’s new users.

Through this result, it is possible to measure the financial performance of the strategies used and have a clearer idea of how much the company should invest to acquire a certain amount of customers.

To achieve this result, you need to have data related to the sales funnel: from how many visitors are attracted to the app to the amount of conversions you make. With this, you can get a point of how many users are conquered within a given period.

With this information, you can calculate the cost of acquiring each user of your mobile application. But how is this calculation done?

How to calculate CAC

Once you understand what is acquisition cost, you need to learn how to calculate CAC. The account is very simple: just divide the total amount invested by the amount of new users.

what is acquisition cost

Contrary to what many may think, the investment made is not just paid advertising. In this case, it is necessary to evaluate other factors, such as:

  • Salary of the marketing team involved in the process;
  • Employee training;
  • Participation in events;
  • Purchase of software and tools;
  • Travel;
  • Ad purchases;
  • Sales commissions,
  • Press office.

Customers who should be considered

When calculating the cost of customer acquisition, you should be careful which customers to consider. In the calculation, only those who have been attracted by marketing investments can be counted.

For example, if you had ten new users attracted by paid media campaigns and three that were the result of indications from a digital influencer, in your CAC calculation you should consider ten customers, not 13.

What period should be analyzed?

Knowing what is acquisition cost and its importance, it is recommended that the calculation be performed monthly. Thus, it is possible to have more detailed data on the results obtained with the investments.

The periodicity is at the discretion of the company. The calculation can be done every two-month, quarter, semester or year. The decision of the period in which the CCS will be measured should also take into account the variations that can happen, especially when it comes to a new application/company.

If your business is new, it is normal for CCS to be high, since the application of mobile marketing strategies is more laborious and end up becoming a long-term investment. In this case, the more attentive you are to variations, the better, since the metric can also indicate the effectiveness of the applied strategy.

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