Are new customers generating profits for my franchise ? Have you ever asked yourself that question? If not, you should think about it. Often, winning more consumers does not necessarily represent a positive return for the company, since the acquisition cost can be much higher than the investment.
This does not mean that you should stop attracting new customers , right? After all, to ensure the sustainability of the business, it is important to take a look at the medium and long term. In fact, many markets are successful even with a high acquisition cost when compared to the value of their products and services over a given interval.
Speaking of which, do you know what customer acquisition cost means? Do you know its importance for a franchise and how to calculate? That’s what I’ll show in this post. Check out!
What is CAC and why is it important?
The Customer Acquisition Cost represents the average investment in direct efforts in order to win over a new consumer . It is an important metric for assessing a franchise’s financial health and also for making decisions that benefit the business.
Therefore, CAC is one of the essential indicators to know if the investment is making a profit or something in the business needs to be rethought. Still, it is widely used by marketing and sales professionals, but it can also be used by other areas of the company, as long as they are related to winning new customers .
How to calculate the cost of customer acquisition?
The formula for calculating the cost of purchasing your franchise is simple. Just add the direct investments and divide the result by the number of customers won in the same period. However, in order to arrive at an accurate number, it is essential to consider all efforts made to obtain new consumers. Find out, next, what should go into the CAC calculation !
It is necessary to include, for example, advertising expenses , the amount of hours spent on content production and lead nutrition – sending materials to potential customers – and participation in fairs and corporate events.
All resources used by employees must be included in the cost of acquisition, such as expenses with telephone and sales tools. Still, it is necessary to consider the hours worked and the trips made in the period that had the purpose to convert customers .
Software used in campaigns
The tools used in marketing campaigns must also include the calculation of CAC. In fact, they are indispensable for the capture and conversion of leads – potential consumers. Therefore, if applied properly, they represent an investment with guaranteed return for your franchise .
If you have hired employees over a period of time, employment costs will need to enter your account. It is worth remembering that the acquisition cost may rise at first, but then it is likely to stabilize with the arrival of new customers .
Customers won in the period
Last but not least, the calculation covers customers won in a defined period. However, you should only consider new consumers from the investment made. Therefore, the rest should not be included in the account.
Did you understand the importance of the acquisition cost for a franchise? In addition to measuring the health of finances, CAC serves as a parameter to optimize investments and make strategic decisions . When using this metric, you will be able to assess, for example, if the value of your services generates profits or if it is necessary to make adjustments, according to the profile of customers and the market, in order to guarantee the sustainability of the business.