Calculating Marketing Percentage Of Customer Acquisition Cost (M%CAC)
What Is M%CAC
The metric that shows the marketing portion or your customer acquisition cost (CAC), calculated as a percentage of your overall CAC to reveal how much your company is spending on marketing as it relates to what you spend to acquire new customers.
Why M%CAC Is Important
M%CAC is important to companies executing marketing programs because it reveals the impact the marketing team’s performance and spending has on overall customer acquisition costs. The results can help spur more strategic marketing and sales decisions.
This includes expenses, salaries, commissions, outside agency fees and the marketing department’s overhead. For sales, it will include sales salaries and commissions, any sales-related overhead and all of your sales expenses.
Sales & Marketing Cost
All program & ad expenses + salaries + other compensation + overhead for BOTH marketing and sales departments. To determine your M%CAC, take your Marketing Cost and divide by your total Sales & Marketing Cost (that you used to find your CAC).
You’re already tracking your CAC, so you can evaluate how much you spend on average to bring in a single client or customer. Tracking M%CAC is important as well, because it gives you the data you need to analyse your spending patterns. When CAC rises, M%CAC helps you determine why.
M%CAC For Analysis
When CAC increases, M%CAC shows you whether the increase was a result of marketing cost increases or sales cost increases. Thus, analysing CAC and M%CAC gives you a lot of information on how efficiently your sales and marketing teams are using their available funding.