Your acquisition costs are much higher than you think

Smart companies are measuring and focused on decreasing their new customer acquisition costs. But most companies are significantly under-calculating the true cost of acquisition.

How? We often measure the most obvious costs, and either forget about or ignore the “soft” costs that add up quickly. Many marketing departments, for example, calculate acquisition costs solely based on out-of-pocket spending – media costs, sometimes software or tool licenses. But what about the salaries of the people managing those campaigns? What about the designers, copywriters and developers required to build campaign infrastructure?

And that’s just on the marketing side of the house. Many organizations combine a marketing figure with the salesperson’s commission. But in complex sales environments, a sales engineer may have invested hours and hours into a deal. Is that time included in your overall acquisition cost calculation? What about travel costs, and sales management time?

And then there’s opportunity cost. If you have reps chasing after bad and/or unqualified deals, you’re still paying for that time (a percent of their base, at minimum) and implicitly NOT using that time to go after more qualified, ready-to-transact business.

Of course, you can drive yourself nuts adding up every little detail and fraction of someone’s time to get a true cost of acquisition. But by at minimum being aware of all resources that contribute to the sales process, and generally understanding their hard and soft costs, you can at least start to better value those resources and manage them more efficiently.

Are the sales engineers focused on the right, high-conversion-potential deals? Is an investment in a marketing automation solution more cost-effective than paying a larger marketing team to continue manually sending campaigns week after week? Do you have documented, consistent processes and templates that make subsequent work faster, more efficient and more effective?

Worth thinking about.