Will Kelly breaks down Customer Acquisition Cost using a real example: $226.80 per customer means you need $24,000 to acquire 100 new ones. Knowing your CAC lets you budget backwards from growth targets instead of guessing how much to spend on ads.
$226.80. That is how much we have to spend to acquire a customer. Very good data there. Now we can figure out how much ad spend we need to push out in order to acquire so many customers. If we want to get 100 new customers this year, guess what we need to do? Spend $24,000 in marketing. That would get us to 100 more customers. If your goal is to get 25 more customers, as long as you know your customer acquisition cost, you can figure out and calculate and make a good educated guess on how much money you need to spend on your marketing to acquire your customer to grow the business to hit your goals.
