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Business Strategy with Hirav Shah AUGUST 04, 2023 | The Indian Eye 34

CAC: Customer Acquisition Cost to

acquire new customer in Business

By optimizing your CAC, you can improve your profitability and grow your

customer base more efficiently

businesses can make informed de-
cisions about their marketing and
sales strategies, and optimize their
efforts for maximum ROI.
• A high CAC can indicate inefficien-
cies in the sales funnel or targeting,
while a low CAC can signal a strong
value proposition and effective
marketing tactics.
• Ultimately, businesses that can low-
er their CAC while maintaining or
increasing customer lifetime value
will be better positioned for long-
term growth and success.
How to track and analyze CAC
over time.
• Tracking and analyzing your CAC
over time is essential for optimizing
By identifying your ideal customer and tailoring your messaging and channels to reach them, your customer acquisition strategy.
HIRAV SHAH you can increase the likelihood of acquiring high-value customers who are more likely to make • To do this, start by calculating your
CAC for a specific period, such as a
repeat purchases (Representative photo)
month or quarter. Divide your total
ustomer acquisition cost, or sales and marketing expenses for
CAC, is a crucial metric for How to calculate CAC. increase the likelihood of acquiring that period by the number of new
Cbusinesses looking to grow • To calculate your CAC, you need high-value customers who are more customers acquired during that
and expand their customer base. to divide your total marketing and likely to make repeat purchases. same period.
By understanding how to mea- • Another strategy is to optimize • Once you have this baseline CAC,
sure and optimize your CAC, you can sales expenses by the number of your sales funnel to improve con- you can track changes over time
new customers acquired during a
make informed decisions about your specific period of time. version rates and reduce the num- and identify areas for improvement.
marketing and sales strategies, and • For example, if you spent $10,000 ber of leads lost at each stage. • For example, if your CAC increas-
ultimately drive more revenue for on marketing and sales in a month • This can include tactics such as es, it may be time to reevaluate
your business. improving website design and user you’re targeting or sales tactics.
and acquired 100 new customers, experience, offering incentives for • Conversely, if your CAC decreas-
your CAC would be $100.
What is CAC and why is it • It’s important to track your CAC sign-ups or purchases, and provid- es, you may want to invest more in
important? over time and compare it to your ing personalized follow-up commu- the channels or campaigns that are
nications to nurture leads.
• CAC, or customer acquisition cost, customer lifetime value (CLV) to • Finally, consider partnering with driving the most efficient customer
acquisition.
is the total cost incurred by a busi- ensure that you are generating a other businesses or influencers in
ness to acquire a new customer. positive return on investment. Conclusion: It’s one of the most im-
• This includes all marketing and • If your CAC is higher than your your industry to expand your reach portant tools to understand Customer
and tap into new audiences.
sales expenses, such as advertising, CLV, you may need to adjust your • By working together, you can share Acquisition Cost to acquire new cus-
promotions, salaries, and commis- marketing and sales strategies to resources and expertise to drive tomer in Business
sions. improve efficiency and profitability.
• CAC is important because it helps down costs and increase your over- Exercise:
all effectiveness.
businesses understand the effec- Ways to reduce CAC. • List down 3 most spending amount
tiveness of their marketing and • There are several ways to reduce your The impact of CAC on for your marketing
sales efforts, and whether they are CAC and improve your profitability. • List down 3 most spending amount
generating a positive return on in- • One strategy is to focus on target- business growth. for your staff who are working for
vestment. ing the right audience with your • Customer acquisition cost, or Marketing and Sales
• By optimizing your CAC, you can marketing efforts. CAC, is a critical metric for busi-
improve your profitability and • By identifying your ideal customer nesses looking to grow and scale. The writer is a well-known
grow your customer base more ef- and tailoring your messaging and • By understanding how much it Astro Strategist and Business Astrologer
ficiently. channels to reach them, you can costs to acquire a new customer, Email: [email protected]

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