What Does Customer Acquisition Cost Mean?
Customer acquisition cost is the cost incurred by an organization while convincing a customer to buy a service or a product. In other words, it is the cost of resources for the business in order to acquire a new customer. Customer acquisition cost involves research, marketing and accessibility costs. Customer acquisition cost is an important business metric which helps organizations to determine the amount of resources that can be profitably spent on a specific customer.
Techopedia Explains Customer Acquisition Cost
Customer acquisition cost is usually expressed as a ratio between the sum total of customer acquisition cost and the number of customers/patrons acquired by the company as part of the customer acquisition strategy. It usually increases as the business or organization matures. When the diminishing return on customer acquisition cost starts, most businesses or organizations adopt different strategies for customer acquisitions. Expenses related to customer relations management & marketing automation, software licenses, sponsorships, content production & management, website & social media and gifts to customers all comprise customer acquisition cost. Companies often use the latest technology and innovations in social media as part of their marketing campaigns, and sophisticated software can be used in determining customer acquisition cost.
