Question
The rate of conversion directly impacts the customer acquisition cost (CAC). A higher conversion rate means that a larger percentage of your prospects are becoming customers, which effectively lowers your CAC. This is because the cost of sales and marketing efforts is spread across more customers. Conversely, a lower conversion rate means that fewer prospects are becoming customers, which raises your CAC as the same costs are spread across fewer customers.
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To determine the customer acquisition cost of sales and marketing activities, a cost sheet can be used to estimate the total CPA across multiple acquisition channels. Enter input variables alongside their respective quantity and rate of conversion, then factor in with and without headcount costs.(Slide 19)
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