What Is Customer Acquisition Cost & How Do I Calculate It?

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Calculating Customer Acquisition Cost, or CAC, is fairly straightforward. It is basically all of your marketing spend for a specified period of time (the period of time does not matter, but I would suggest 6 or 12 month intervals), divided by the number of paying customers you have acquired in that same time frame.

So, to clarify that’s Marketing Spend/# New Paying Customers over a specific time period.

The easiest way to explain it is through an example. Let’s say you are running a candle shop. In six months, you spend $1,000 for Google PPC, $550 for a postcard mailing, $100 for an ad in the local newspaper, and $350 for a few email blasts to local community members. That’s a $2,000 marketing spend. Now, take that number and divide it by the number of new, paying customers you acquired in the same six month timeframe. Let’s say that number is 100 for simple math purposes.

That is a $20 CAC.

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Capture Your Target Audience with Valuable Content

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You no longer need a publisher to create valuable marketing content around your brand. If you have a strong full-time marketing resource or consultant, you’re good to go. After all, they know your organization and its value better than anyone. If you want to win over the hearts, minds, and wallets of your top prospects, you will create strong content that builds your reputation, earns buyers’ trust, and helps you establish authority in your industry.

Create Useful Content

Everyone is busy. Attention spans are short. If you want to connect with your prospects, you have to create and share content that they find useful. If you’re just throwing content out there to build your library, you are wasting your time, and time is by far your most valuable resource. If your goal is to produce thoughtful content, try spending some time researching before writing. You can even go as far as asking existing clients or donors what they have found useful or would find useful. Your main goal with content marketing should be to keep your finger on the pulse of the people you want to engage.

Stop Self-Promoting

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3 Ways to Humanize Your Brand & Improve Customer Loyalty

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Although going for the hard ask upfront might work for you, it usually does not result in loyal or repeat customers. The people who keep investing in your brand are the customers who feel the most connected to it. Marketing your products and services with a goal of emotionally connecting to prospects will result in less turnover and fundraising with a goal of making an impact instead of selling the standard tax benefits of donating will help you retain donors year over year.

Get a Marketing Plan

If you do not have one already, you should really invest in a marketing plan. This will outline your strategy moving forward and improve the likelihood that you will achieve your goals. Having a solid marketing plan from the start is also great for measuring your productivity and success throughout the year. You will have milestones and metrics to hit and a great communications plan for hitting all of your intended targets.

Tailor Your Messaging

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