Business Jargon 4 – Customer Acquisition Costs

This is part of my off and on series where I demystify business jargon nonsense words. This one is ‘customer acquisition costs’.

What it means

As you can probably work out for yourself, as you’re not daft, customer acquisition costs means how much you need to pay out (in marketing, time, freebies etc) to get a customer to spend with you for the first time.

Why you’d want to work this out

You need to know how much you’re prepared to spend to get a customer, so you can see if it’s worth your while. You also need to know your ‘lifetime customer spend’, which is how much that customer is going to be worth to you.

If you’re a greengrocer in a residential area, you might want to spend up to £30 to get a new customer who lives round the corner and might spend a tenner a week with you. Spend £30 to get £520, of which £400 is gross profit.

If you’re a consultant whose clients will spend 10k with you, you’re probably happy to spend a bit more. You should be happy to spend more than the greengrocer, but many of my consultancy clients have historically spent very little time or money on acquiring customers.

Want some help with working out your numbers?

If you’d like some help with working out what you should be spending (and more importantly, what you should be spending it on), then do get in touch for a chat about your business and how to give it a boost.

Photo credit – Dmitry P