“Sales” and “Marketing” are usually used in the same sentence. But do you know which team is the real breadwinner?
Do you have both a sales and a marketing team but are unsure which team is doing more work to bring in new customers? Wonder no more, do the math! It’s easy!
Deciding where to spend money when trying to bring in new customers can either make or break your business. Know where you are spending now so that you can make adjustments that could save your business.
In this post, we will discuss a key strategic marketing performance metric Marketing % of Customer Acquisition Cost and what it can tell you about your customer acquisition strategy.
What It Is: The Marketing % of Customer Acquisition Cost is the marketing portion of your total Customer Acquisition Cost (CAC), calculated as a percentage of the overall CAC. Not sure how to calculate CAC? Shame on you! But don’t worry, you can learn it here.
How to Calculate It: Take all of your marketing costs, and divide them by the total sales and marketing costs you used to compute CAC.
Marketing Costs = Expenses + salaries + commissions and bonuses + overhead for the marketing department only.
Sales and Marketing Cost = Program and advertising spend + salaries + commissions and bonuses + overhead in a month, quarter or year
Formula: (Marketing Cost / Sales and Marketing Costs) x 100 = M%-CAC
Let’s Look at an Example:
Marketing Cost = $20,000
Sales and Marketing Cost = $30,000
M%-CAC = $20,000 / $30,000 = 66.6%
What This Means and Why It Matters: The M%-CAC can show you how your marketing team’s performance and spending impact your overall Customer Acquisition Cost. An increase in M%-CAC can mean a number of things:
- Your sales team could have underperformed (and consequently received) lower commissions and/or bonuses.
- Your marketing team is spending too much or has too much overhead.
- You are in an investment phase, spending more on marketing to provide more high-quality leads and improve your sales productivity.
Did you find our article useful? To learn more Marketing Metrics, download our free eBook “6 Marketing Metrics Your Boss Actually Cares About.”