Determine your true Customer Acquisition Cost (CAC) by modeling your marketing costs and sales funnel conversion assumptions.
Cumulative Conversion Rate:
0.75%
Final Customer Acquisition Cost (CAC):
6666.667
This means you need 133 leads to acquire one customer at the current conversion rates.
CAC is calculated by dividing your cost per lead by the combined conversion rate of your entire sales funnel.
Formula: CAC = CPL / (Conv1% × Conv2% × Conv3% × Conv4%)
CAC = CPL / (Conv1% × Conv2% × Conv3% × Conv4%)
Example: CPL is $100 and your total funnel conversion (Lead to Customer) is 2%.
A healthy ratio depends on your LTV (Lifetime Value), but generally, a CAC that is 1/3 of your LTV is considered sustainable.
High CAC usually stems from either high lead costs or friction points in the conversion funnel stages.
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