As marketers, we know the list of metrics never ends, from social media engagement numbers to website visits to bigger things like the total cost of revenue and customer acquisition.
But the thing is, while your boss likely understands all these metrics, not all the numbers matter to them.
There are however some metrics that your boss actually cares about, and that’s why today we will tell you about 3 very important metrics that your boss truly wants to know about.
Customer Acquisition Cost (CAC)
The Customer Acquisition Cost (CAC) is a metric used to determine the total average cost your company spends to acquire a new customer. To calculate it, all you have to do is, take your total sales and marketing spending for a specific time period and divide that by the number of new customers for that time period.
First thing you need to know is, what sales and marketing cost equals, it’s program and advertising spendings + salaries + commissions and bonuses + overhead in a month, quarter or year. And the second thing you need to know is new customers which is the number of new customers in a month, quarter, or year.
Marketing % of Customer Acquisitions Cost
The marketing % of the customer acquisition cost is the marketing portion of your total CAC, calculated as a percentage of the overall CAC.
You might be asking, how do I calculate that? Well, all you have to do is, take all of your marketing costs, and divide by the total sales and marketing costs you used to compute CAC.
If you’re wondering why this metric is important, you should know that it can show you how your marketing teams performance and spending impact your overall Customer Acquisition cost.
Time to Payback CAC
The Time to Payback CAC shows you the number of months it takes for your company to earn back the CAC it spent acquiring new customers.
In order to calculate it you first need to know what Margin-Adjusted Revenue is, and simply put it’s how much your customers pay on average per month.
Now all you have to do to calculate the Time to Payback CAC is taking your CAC and dividing by your margin-adjusted revenue per month for your average new customer. The reason why you need to know this is because the less time it takes to payback your CAC, the sooner you can start making money off of your new customers.
Generally, most businesses aim to make each new customer profitable in less than a year.
Focusing on these metrics doesn’t mean that the other numbers are any less important, you should however focus on reporting these numbers to your boss. Simply put it’s crucial to convey your performance in a way that your C-suite can get excited about.