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SaaS CAC: How to calculate and optimize

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Customer acquisition cost (CAC) can quickly become a crushing aspect of your SaaS metrics that leads to failure. To be successful, keep CAC balanced with LTV and optimize your Sales and marketing spend.

Here we walkthrough exactly how to calculate Customer Acquisition Costs (CAC), including what to and not to include in the calculation, as well as how to optimize this crucial SaaS metric.

Published in: Software
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SaaS CAC: How to calculate and optimize

  1. 1. Customer Acquisition Cost (CAC): Calculating and Optimizing Price Intelligently’s SaaS Metric Mondays Customer Acquisition Costs (CAC)
  2. 2. Let’s talk about CAC Your SaaS company’s toughest balancing act Customer Acquisition Costs (CAC)
  3. 3. CAC = Customer Acquisition Cost Customer Acquisition Costs (CAC)
  4. 4. CAC = The total cost of sales and marketing efforts that are needed to acquire a customer. It is the defining factors in whether your SaaS company has a viable business model that can yield profits by keeping acquisition costs low as you scale Want To See What Your SaaS Metrics Is Right Now? Get your free ProfitWell account – 1-click SaaS Metrics >> Customer Acquisition Costs (CAC)
  5. 5. Here’s How You Breakdown CAC Visually (spreadsheet breakdown) Customer Acquisition Costs (CAC)
  6. 6. All that stuff is great but…why should you even care? Customer Acquisition Costs (CAC)
  7. 7. “Customers Are Costly – Not managing CAC is like descending from the face of Yosemite without a harness” Customer Acquisition Costs (CAC)
  8. 8. More specifically… Understanding your CAC can help Shorten the sales cycle and get customers using the product faster Sales Improve projections and help determine the companies profitability FinanceMarketing Optimize channels that actually bring in good leads and prospects See the breakdown of your MRR Churn with ProfitWell >> Customer Acquisition Costs (CAC)
  9. 9. Lets dive deeper and calculate CAC like a #Champ Customer Acquisition Costs (CAC)
  10. 10. Calculating CAC is all about the money going into S&M With CAC it is simple, look at the Total Sales & Marketing and the Total New Users CAC Criteria Breakdown Items to Include Items to Exclude Sales & Marketing (Salaries, Tools, Spend) Customer Success Costs New Users Churn Customer Acquisition Costs (CAC)
  11. 11. CAC = EQUATION: Total Cost of Sales & Marketing # of Customers Acquired CAC = S&M Salaries-Tools-Spend 1 + S&M Salaries-Tools-Spend 2 S&M Salaries-Tools-Spend n … Acquired Customer 1 Acquired Customer 2 Acquired Customer n …+ SIMPLIFIED: $36,000 (Sales & Marketing Spend) EXAMPLE: CAC = 1,000 (Customers Acquired) = $36 The SaaS language of CAC Customer Acquisition Costs (CAC)
  12. 12. Once you master calculating like a #champ you can optimize like an even bigger #SaaS metric machine Customer Acquisition Costs (CAC)
  13. 13. Get your CAC As Close To “0” As Possible By: 1. Optimize your funnel 2. Strengthen Sales & Marketing spend 3. Quickly engage new customers and prospects 4. Inbound Marketing $ $ $ $ $ $ $ $ $ $ $ $ Customer Acquisition Costs (CAC)
  14. 14. Quantify each step of the process, and understand how many visits lead to leads, how many leads lead to opportunities and how many opportunities lead to customers Key Optimization Optimize your funnel Visitors Stranger Leads Opportunity Customer Customer Acquisition Costs (CAC)
  15. 15. Take a lean approach to marketing and sales expenses. Put money into channels that have proven returns so that you aren't wasting any more dollars Key Optimization Strengthen sales & marketing spend Customer Acquisition Costs (CAC)
  16. 16. Cut down the time it takes to get new customers engaged with your product. The quicker product engagement happens per customer the cheaper acquisition becomes. Key Optimization Quickly engage new customers and prospects Customer Acquisition Costs (CAC)
  17. 17. Use real deal sweat equity to produce content that provides value for your audience. It’s a great way to bring leads through your funnel at minimal cost to your business Key Optimization Inbound marketing Customer Acquisition Costs (CAC)
  18. 18. Boom. You’re now a CAC champion. Customer Acquisition Costs (CAC)
  19. 19. Want real time SaaS Metrics? Know and understand your SaaS Metrics with ProfitWell for free – the most accurate metrics on the market Click here to get your free ProfitWell account >> Customer Acquisition Costs (CAC)

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