New Dreamdata Customer Acquisition Cost (CAC) report
We’re thrilled to announce the release of our Customer Acquisition Cost report - helping B2B marketers easily monitor and report the cost-effectiveness of their acquisition strategies.
Customer Acquisition Cost
Customer Acquisition Cost (CAC) is a KPI that measures how much it costs to get customers to buy your product.
To calculate it, you take the totality of your costs over a period - think not only paid campaign costs but also salaries and tech subscriptions - by the number of customers acquired over the same period.
Ultimately giving you an average of the holistic costs involved with acquiring a customer.
The idea is that this number should move downwards. Which is achieved by either acquiring more customers for the same cost or lowering the cost of acquiring the same number of customers.
From this, it’s easy to see how CAC is a favourite with investors and C-suites for measuring marketing’s efficiency - especially at present when budgets are being closely scrutinised.
But its use goes well beyond the boardroom. For instance, it offers B2B marketers a guiding star for measuring the efficiency of their efforts, functions as a benchmark for setting realistic pipeline and revenue targets, and helps track changes in go-to-market strategies.
You can dig deeper into Customer Acquisition Cost and how to reduce it (wisely) in this post.
And our new CAC report enables you to reap all these benefits without the hassle of manual number crunching.
Let’s take a look at what it offers.
Customer Acquisition Cost over time
The first graph you’ll find is the CAC by Stage Over Time. Here, you can explore your CAC values by pipeline stage to monitor acquisition costs at different points in the journey.
This is a particularly useful function for the B2B marketer working on making their demand gen efforts more efficient.
As already mentioned, ideally you want to be seeing a downward trend. But this will depend somewhat on where your business is in its growth journey.
For instance, in early growth stages you should expect a steep rise in CAC when scaling your go-to-market. Or when hiring additional people, or expanding the tech stack. All of which should, eventually, lead to more customers and with it a lower CAC.
In the report, you’ll have the choice of selecting monthly or quarterly aggregation.
In our case at Dreamdata, given our lengthy customer journeys and the time it takes for strategies to take effect, we have been setting this to quarterly aggregation to get a better view of the trend.
Stages Count over time
Next we find the ‘Stages Count - Over Time’ report. This report allows you to monitor the ‘acquisition’ side of things, which you can then use to compare against your CAC.
Of course, the CAC calculation already factors in this number. But isolating it helps easily identify any increase in acquisition. So, if you’re running a demand gen strategy and want to monitor its efficiency, you would want to see this number rise while the CAC remaining low.
Cost over time
The third graph on the report shows you the breakdown of costs. This offers a closer scrutiny of the other side of the CAC calculation, helping you monitor which cost buckets have increased and decreased over the period. It might be that your expanding tech stack is shifting your CAC up - maybe it’s time to renegotiate prices or drop the dead weight altogether.
Customer Acquisition Cost: Average Customer Value over time
Finally, we get to the CAC: Average Customer Value (ACV) chart.
This chart helps contextualise the CAC number by helping you monitor the other side of the coin, revenue.
The CAC: Average Customer Value chart basically gives you the answer to: ‘how many dollars of revenue am I getting for dollar spent?’
There’s a sweet spot to hit here of course. While you want to have a good ratio of dollar paid to dollar gained, having too low a ratio might mean you’re spending too little, and possibly missing out on customers as a result - think scalability.
By contrasting this chart with the lead/customer count chart on the report will help you identify whether or not you’re steering off track.
How to start using the CAC report?
And the best thing?
To get started with the new CAC report, all you need to do is plot in your fixed cost data (salaries, commissions, tools, etc.) into this sheet. Which we’ll combine with all the cost data we’re tracking through our integrations, and you’re ready to go.
Of course, if there are any sensitivities around salaries and commissions costs, you can always bundle these together with other fixed costs.
