Acquisition Cost: Calculating the ROI of Your Marketing Dollars

Learn a quick formula on how to find your acquisition cost of each client from your marketing dollars (the ROI of your marketing spend).

Today we’re going to talk about where your marketing dollars are going. Are they going into your pocket or someone else’s?

Crystal, so can you help us understand the ROI, or the return on investment, of our marketing dollars? And how they get from Point A to Point B?

Yes. This is a very interesting conversation, so I’m glad that we’re having it. So, we are going to make this really simple today because what we’re really talking about is acquisition cost. Meaning how much does it cost to bring on a new client?

What do you mean by acquisition cost? Is there like a formula to find that?

There is a formula. I’m happy to share it with you.

Acquisition Cost Formula

So, the formula for acquisition cost is simple but super powerful, okay? So, for example if you spent 100 dollars on Google Ads for a month, let’s say. And you got five new clients from that campaign, what would your acquisition cost per client be, Sunshine?

Okay, so you said five clients, 100 bucks. So, I’m going to go with division and say 20 dollars a client.

Yes, you are absolutely right.

So, it’s just division of how many clients you acquired, acquisition cost, into the amount of money you invested.

All right, makes a lot of sense. Okay, so if I’m investing money into marketing, why do I need to know how much it costs me per client?

Good question. This is actually one of the most important metrics you should be tracking in your business to make sure that you’re not just throwing dollars down the drain.

Importance of Tracking Acquisition Cost

So, this metric is really important because when you start tracking what works and what doesn’t work so well, in terms of your marketing, then it gives you the ability to shift your marketing dollars to the campaigns that are working really well and getting rid of and letting go of the marketing campaigns that aren’t working as well. So, you can maximize your ROI, return on investment.

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