Are your marketing costs in alignment with the cost of acquisition of acquiring your customers?

The cost of acquisition tests can be a great reality check on where you’re spending your marketing dollars and how effective is your marketing spending.

Take a look through your customer base and ask yourself the following questions:

1. Where have you acquired your customers?

2. How much does it cost to generate each particular class of customers?

3. Look at your marketing budget. How does that line up with the acquisition costs? What things do you spend money on marketing on that aren’t related to customer acquisition?

4. What part of the marketing budget would be related to servicing customers rather than acquiring customers? For example, you may have part of your marketing budget oriented towards encouraging customers to keep up with their renewals or to be purchasing additional products and services from you.

So, what did you find out? You might see areas of marketing where the dollars are not really generating any productive use. You might find other areas that are under invested where you’re getting a very high return on your marketing dollars. Perhaps, in those areas, you’d get some fruitful yields by putting more dollars into those marketing categories and pulling dollars away from other categories that aren’t generating much effect.

Jon Paul, MBA, CPA, CMC, CM&AA

President, Value Added Finance Resources
Bringing new insights on results and maximizing company value