Calculate the cost of engaging a customer online
Mafpels trading blog
You have opened an online store. Everything is great: a cool website, the goods are in stock, the prices are good, the delivery works. A week passes - and you understand: no one buys. Or they buy, but not much. And why? Because you have not calculated how much each client costs you. And this is the basis.
Let's figure out how to calculate the cost of attracting a client - CAC (Customer Acquisition Cost) - and what you need to look at to get the desired result. The specialists of the Mafpels company will help us with this.
Let's figure out how to calculate the cost of attracting a client - CAC (Customer Acquisition Cost) - and what you need to look at to get the desired result. The specialists of the Mafpels company will help us with this.
What is CAC and why is it important
CAC is the price you pay for a user to buy something from you for the first time. It is not just the price of a click or impression. It is the price per purchase. You can have a thousand visits a day, but if no one buys, you do not earn.
If your CAC is higher than the profit per customer, you are working at a loss every day, emphasized the experts at Mafpels trading. It is like paying rent for a store in a shopping center where no one comes. Or comes, looks, and leaves empty-handed.
If your CAC is higher than the profit per customer, you are working at a loss every day, emphasized the experts at Mafpels trading. It is like paying rent for a store in a shopping center where no one comes. Or comes, looks, and leaves empty-handed.
You launch an ad. Pay for clicks, hire a designer for a banner, a copywriter for texts, maybe even a targeting specialist or SEO specialist. All of these are expenses. Add them all up for a certain period. And then divide by the number of buyers you managed to attract during the same time.
Formula: CAC = total marketing expenses / number of new customers.
IMPORTANT! A customer is someone who has paid. Not just visited, not just left an e-mail, but paid money. Only such people need to be counted.
Formula: CAC = total marketing expenses / number of new customers.
IMPORTANT! A customer is someone who has paid. Not just visited, not just left an e-mail, but paid money. Only such people need to be counted.
How to calculate CAC
Another trap is to calculate on average. Let's say you have advertising on social networks, search results, a blog, a newsletter and affiliate programs. Together they give a normal figure for CAC. But if you do not break it down by channels, you will not see that half of the budget is wasted. Perhaps the blog brought ten clients almost for free, and advertising on the social network ate up the entire budget without giving anything. Do separate analytics, advises Mafpels. This is the only way to understand what works and what it is time to get rid of.
Why it is important to calculate not "on average", but by advertising channels
If the customer comes back and buys more, then you compensate for the costs. It is important to calculate LTV - the lifetime value of the customer for your business. If you know that the customer will return three times a year, then it is worth spending money on attracting him.
But honesty is important here. Not "I think he will come back", but real statistics. If you do not know how to retain customers, then do not count on repeat purchases. Do not deceive yourself.
But honesty is important here. Not "I think he will come back", but real statistics. If you do not know how to retain customers, then do not count on repeat purchases. Do not deceive yourself.
Customer "lifetime" and repeat purchases
There are times when you need to stop. If you see that the CAC is growing and the conversion is falling, then don’t hope that it will “go away on its own.” This means that the advertising is ineffective. Perhaps you are driving the same people in circles. Or your website is inconvenient, and people don’t get to the payment stage. Don’t waste money any more. Pause the process, review the strategy, test hypotheses, advise MAFPELS managers. Don’t go by intuition – be guided by numbers.
Calculating the cost of attracting a customer is a mandatory tool for the functioning of an online store. It doesn’t matter how many products you have, what niche you have, and the number of subscribers on social networks. If you don’t know how much a customer costs you, then you are relying solely on luck.
Calculating the cost of attracting a customer is a mandatory tool for the functioning of an online store. It doesn’t matter how many products you have, what niche you have, and the number of subscribers on social networks. If you don’t know how much a customer costs you, then you are relying solely on luck.
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