Where do you get the most return for your bucks out of marketing? Are there nonproductive areas that don't generate much volume? Prune here and your acquisition costs can get back in line.

This is also terrific prospective analysis, such as for budgeting. It can be a better way to look at your marketing costs and holding marketing accountable for productive spending towards new customers. If you just look at marketing costs as a percentage of sales, you could be asking your current customers to carry some of your load of your marketing costs towards new customers. Have marketing include acquisition costs in your budget templates. You could find that marketing will make better judgment calls and tweaking to the budget even before it comes up for your review.

Over time, best firms work acquisition costs into their mindset. Rather than thinking to budget marketing costs just as a percentage of sales, they instead think what amount of money they want to spend in marketing to acquire customers, then work back to fill in the details of the marketing plan.

Here are some cases where I have used this for clients.

1.       Business Plan. For a healthcare client, I built this into the financial model used for raising funds and budgeting. Acquisition costs were broken down by lines of service to see where marketing efforts were most productive and where plans needed to be changed. The clients also used these acquisition costs to establish marketing costs up to three years ahead as they planned for the number of key corporate accounts they would land.

2.       Pricing and Monitoring. For a telecom client, I used acquisition costs both before and after the fact. In marketing, acquisition costs were factored into analysis of new rate plans or modifications to rate plans. The rate plans had to be priced attractively enough to cover a fair return on the acquisition costs. Afterwards, actual acquisition costs were reviewed against different customer classes, such as by region or by credit score, to see if any segments were falling out of line.

Acquisition costs are not just for a one-time analysis.  Make them an ongoing part of your budgeting, pricing and other marketing activities.