VAC - Visitor Acquisition Cost
LAC - Lead Acquisition Cost
CAC - Customer Acquisition Cost
VAC = The Cost of a Visitor to your site.
You might spend a R1000 on Google Adwords and receive 400 Visitors to your site.
VAC for Google Adwords is R2.50. (R2.50 x 400 Visitors = R1000)
You might spend R300 on Facebook Ads and receive a 100 Visitors to your site.
VAC for Facebook Ads is R3. (R3 x 100 Visitors = R300)
You might spend R100 on Advertising on a Business Directory and receive a 2 Visitors to your site.
VAC for the Business Directory is R50. (R50 x 2 Visitors = R100)
LAC = The Cost to get a Lead from your site.
You received 400 Visitors from Google Adwords and from those visitors,
only 20 made contact or requested a quote and can be considered a Lead.
These 20 Leads was at a Total Cost of R1000.
LAC for Google Adwords = R50. (R1000 ÷ 20 Leads = R50)
You received a 100 Visitors from Facebook and from those visitors,
only 4 made contact or requested a quote and can be considered a Lead.
These 4 Leads was at a Total Cost of R300.
LAC for Facebook Ads = R75. (R300 ÷ 4 Leads = R75)
You received 2 Visitors from a Business Directory and from those visitors,
only 1 made contact or requested a quote and can be considered a Lead.
This 1 Lead was at a Total Cost of R100.
LAC for Business Directory = R100. (R100 ÷ 1 Lead = R100)
CAC = The Cost to get a Customer/Deal/Sale
From the 20 Leads you received from Google Adwords, you had 10 Sales.
Google Adwords CAC = R100. (R1000 Spent ÷ 10 Sales = R100 per Sale)
From the 4 Leads you received from Facebook Ads, you had 1 Sale.
Facebook Ads CAC = R300. (R300 Spent ÷ 1 Sale = R300 per Sale)
From the 1 Lead you received from the Business Directory, you had 0 Sales.
Business Directory CAC = Unknown. (R100 Spent ÷ Unknown Sales = Unknown per Sale)
Taking the examples above into consideration, you will get a Customer for every:
R100 you spend Google Adwords
R300 you spend on Facebook Ads
So where would you prefer spending your Advertising Budget?
Everyone would agree that you will spend all your advertising budget where you have the lowest CAC (Customer Acquisition Cost).
Do you know your CAC from all the different mediums where you advertise?
As we always say, you can't Manage what you do not Measure.
Contact Us, to Measure and Manage your Acquisition Costs.