Knowing your Customer Acquisition Cost (CAC) is essential for your company, especially if you are scaling your sales. A clear understanding of it will help your company to scale faster and to improve your profitability.
If you know how much a customer will cost you in a month or a year from now you not only have a strategic advantage over your competition but also a better understanding of your sales processes.
CAC is calculated by dividing the costs and expenses for acquiring new customers by the number of customers you have acquired in the same period. For accurate CAC forecasting, you need to do forecasting for both your customer acquisition costs and new closed deals. All of this is automated in Calqulate.
How Calqulate creates your CAC-forecast
CAC is dependent on different variables. In order to have a working CAC forecast, you need to set up a few things first:
- You need to add a CAC percentage for your employees. A Sales or Marketing person's salary should have a CAC percentage of 100 %. Check out our article about Customer Acquisition cost to learn how to add CAC values for your employees.
- Set up your future hires. If you already know that you will hire a new marketing person two months from now, add them as future hires so their salaries will be included in the CAC forecast.
- Map your Chart of Accounts and assign sales and marketing expenses to CAC. Mapping your Chart of Accounts is one of the most important steps in setting up your Calqulate Account.
- The Chart of Accounts links to our Expense Management section. Check out more about this is in this article.
- Many sales and marketing expenses are recurring, such as sales tools fees, and they can easily be forecasted. In order to have an accurate CAC forecast, you need to have a good Expense forecast.
- The Sales forecast is essential for your CAC-forecast. If you have not done your Sales forecast, set one up with the help of our article.
- In order to get an accurate churn analytics, set up the renewal probabilities of your current subscriptions.
After completing all steps mentioned above, you should go and check out your CAC-forecast. Go to the left-hand menu METRICS > Unit Economics. The chart Customer Acquisition Cost shows you your CAC per new customer , both actuals and forecasts.
That’s it you have created your CAC forecast, this will help your business to grow.
Updated over 1 year ago