How to calculate fully loaded CAC?
Calculating fully loaded Customer Acquisition Cost (CAC) involves considering all the costs associated with acquiring a customer, including both direct and indirect expenses.
To calculate fully loaded CAC, follow these steps:
Determine the Total Sales and Marketing Expenses: Sum up all the costs directly related to sales and marketing efforts. This includes expenses such as advertising, marketing campaigns, salaries and commissions of sales and marketing personnel, software subscriptions, and any other costs specifically incurred to acquire customers.
Identify Other Supporting Expenses: Identify additional expenses that indirectly contribute to customer acquisition. This may include costs like salaries of customer support staff, overhead costs, technology infrastructure, tools, and systems used for customer acquisition purposes.
Determine the Number of Customers Acquired: Identify the total number of customers acquired within a specific time period.
Apply the Formula: Divide the Total Sales and Marketing Expenses plus Other Supporting Expenses by the Number of Customers Acquired.
The formula for calculating fully loaded CAC is as follows:
Fully Loaded CAC = (Total Sales and Marketing Expenses + Other Supporting Expenses) / Number of Customers Acquired
For example, if the total sales and marketing expenses are $100,000, other supporting expenses amount to $50,000, and the company acquired 100 customers, the calculation would be:
Fully Loaded CAC = ($100,000 + $50,000) / 100 = $1,500
Therefore, the fully loaded CAC for this example would be $1,500.
Calculating the fully loaded CAC provides a more comprehensive understanding of the costs involved in acquiring customers. It helps businesses assess the effectiveness of their marketing and sales efforts, optimize resource allocation, and make informed decisions about customer acquisition strategies.
By tracking and analyzing fully loaded CAC, businesses can evaluate their customer acquisition activities' return on investment (ROI) and identify opportunities to improve efficiency and reduce costs.
