Customer Acquisition Budget is the budget you have to acquire a new customer. Knowing this number will help you evaluate and see which marketing channel is feasible for your company for promoting certain services.
Let’s look at this terminology with an example. Let’s say your company offers scar removal service.
Each customer usually goes to your practice for five sessions. Each session, each customer on average spends $300. In order words, this customer brings in $1500 revenue to your company. The $1500 is also known as Customer Lifetime Value*.
The amount you are willing to spend to bring a customer who will pay you $1500 is your Customer Acquisition Budget for this specific service.
If you don’t have a number at heart, the golden rule of thumb of assigning a customer acquisition budget is 10% of the revenue. In this example, it is $150 / customer ($1500 x 10% = $150).
Keep in mind, leads do not equate to customers. Once we know your customer acquisition budget, then the next thing we need to look at is your lead acquisition budget.
*Customer Lifetime Value is always higher than how much they pay you for one service because you can upsell the customer other services that you offer. In this article’s example, let’s say a person has successfully removed his or her scar, you can upsell her on laser hair removal. This is also why customer retention and upselling are important.
Customer Acquisition Budget
Customer Acquisition Budget is the budget you have to acquire a new customer. Knowing this number will help you evaluate and see which marketing channel is feasible for your company for promoting certain services.
Let’s look at this terminology with an example. Let’s say your company offers scar removal service.
Each customer usually goes to your practice for five sessions. Each session, each customer on average spends $300. In order words, this customer brings in $1500 revenue to your company. The $1500 is also known as Customer Lifetime Value*.
The amount you are willing to spend to bring a customer who will pay you $1500 is your Customer Acquisition Budget for this specific service.
If you don’t have a number at heart, the golden rule of thumb of assigning a customer acquisition budget is 10% of the revenue. In this example, it is $150 / customer ($1500 x 10% = $150).
Keep in mind, leads do not equate to customers. Once we know your customer acquisition budget, then the next thing we need to look at is your lead acquisition budget.
*Customer Lifetime Value is always higher than how much they pay you for one service because you can upsell the customer other services that you offer. In this article’s example, let’s say a person has successfully removed his or her scar, you can upsell her on laser hair removal. This is also why customer retention and upselling are important.