We all want our lingerie businesses to be roaring successes.
Whether you already run a booming business or are yet to break even, the long term goal has to be to grow, and grow, and then grow some more. What’s more, the only way to do that is to make sure that you gain new customers on a regular, consistent basis.
Sadly, though, gaining new business comes with its own amount of associated costs. Unless you’re extremely lucky, you won’t have a whole load of clients just ‘stumble upon’ your business and start being loyal to it. If only it were that simple. No, you need to spend money to make money, as the age-old saying goes. But wait, how much does it cost to acquire a new customer?
The answer may be more plain that you imagine. While many business owners are blind to what’s in front of them, it doesn’t actually have to be overly complex. In truth, there’s a very straightforward way to work out how to calculate customer acquisition cost rates for your business. Luckily, you’ve come to the right place.
Here’s what you need to know and how it can help you boost your lingerie business.
What is Customer Acquisition?
Put shortly, Customer Acquisition means gaining new customers. For every customer you make, there is an associated Cost of Customer Acquisition (CAC).
At first, it may all sound a tad complicated but it doesn’t have to be. All we’re trying to work out here is how much you’re spending vs. how much the gain is worth to you and your business. So, when we ask ‘how much does it cost to acquire a new customer?’ we’re really looking at whether we’re spending more than we ought to be.
Gaining new clients and customers for your business doesn’t happen overnight. You might have to pay an influencer to promote your wares, launch a social media campaign, or invest in content marketing. All of the above costs money and the end game is to gain more customers than you have right now.
A standard Customer Acquisition Cost Formula will take into account these associated costs and look at how much you’re spending compared to what your business stands to make in the long run. What’s more, once you learn the formula, you can use it time and time again.
Why is it so important for your business?
Now, you might be wondering why the CAC is so important for your business. After all, so long as you’re making money, who cares about ‘metrics’? Well, it could be more vital than you think…
The point here is that your lingerie business should never be hemorrhaging money without seeing a decent return on investment (ROI). So, you need to work out how much each sales and marketing cost is making you or, indeed, how much you stand to make from it. Once you know its value, you will have a better grasp on where and how you ought to be dividing up your budget. It’s that simple!
How to Calculate The Cost of Customer Acquisition
As we’ve already covered here, calculating the CAC is easier than you might imagine. There is, in fact, a very handy formula that you can use here.
To work out the CAC, you need to figure divide your total marketing campaign costs (MCC) by how many customers you’ve acquired (CA) as a result of them. The equation should look a little something like this:
CAC = MCC ÷ CA
So, if your marketing costs (MCC) are around $1,000 per month and you gain 50 new customers each month, your equation to work out the CAC will be as follows:
CAC = 1,000 ÷ 50
In this case, the CAC would be equal to 20. That means that it costs the person’s business $20 per new customer that they gain. However, it’s not just the one-time cost that should be considered here. The next step is about considering whether that is worth it for your business and, if not, how you can improve your costing.
How to Improve Your Cost of Customer Acquisition
Needless to say, once you’ve figured out what your current CAC is, you will want to go ahead and make it better. The more customers you can gain for your money and the higher your ROI, the more successful your business will be.
Finally, after you’ve literally done the math, it’s time to work out how you can improve your CAC and really make it work for you. You should know that there’s an element of trial and error here. You will, of course, need to make sure that you have a budget to try out various marketing streams and see what works the best for your particular lingerie business.
It’s worth considering potentially more profitable methods as they crop up. In essence, it means that you can evaluate your costs on an ongoing basis. There are a few things that you need to keep in mind while undertaking this process, including how much different channels cost you, what the value each customer has to your business, and how this could be improved. It’s not something that happens overnight, but it’s so worth your time and energy to get this right.
Conclusion: Keep Adjusting to Find What Works
The entire point of doing all this math and changing the way you sought out new custom is so that you make more money for your business. So, that means that if something’s not working well, you will need to readjust it so that it does. Now that you understand the process in full, you can do just that and drive your lingerie business to new (and yet more profitable) heights.