What are the different methods for calculating Customer Acquisition Cost (CAC)?

What are the different methods for calculating Customer Acquisition Cost (CAC)?

There are several methods to calculate CAC, including the simple method, the blended method, and the cohort analysis method. Would you like to know more about each?

Yes, please explain the simple method.

The simple method calculates CAC by dividing the total cost of sales and marketing by the number of new customers acquired in a specific period. For example, if you spent $10,000 and acquired 100 customers, your CAC would be $100.

What about the blended method?

The blended method combines all customer acquisition costs over a period and divides it by the total number of customers acquired, giving a more comprehensive view. It accounts for both direct and indirect costs.

Can you explain cohort analysis?

Cohort analysis involves tracking a specific group of customers over time to see how much it costs to acquire them. This method helps in understanding the long-term value of customers acquired through different channels.