Customer acquisition cost

A monthly figure, worked out once the payroll and advertising numbers are in. The weekly Scorecard version is cost per lead or per qualified opportunity, which one person can pull from the ad platforms and the sales system on a Monday. Acquisition cost then confirms every month whether the cheaper leads were worth having.

Acquisition cost only means something next to what a customer is worth. On its own it invites cost cutting, and the cheapest customers to acquire are often the quickest to leave. The rule of thumb in subscription businesses is that lifetime value should be at least three times acquisition cost, though watching the number move matters more than the multiple.

Worked example: A meal delivery startup put its acquisition cost at nineteen dollars, counting advertising alone. Adding two salaries and the commission paid on annual plans took it to sixty-one. At nineteen the paid channel looked like free money. At sixty-one, against an average customer life of five months, it lost money on every signup outside referrals.

Sources: klipfolio.com/kpis/saas; kpi.org/kpi-basics