Question
Which two aspects of a company's customers could a high customer acquisition cost (CAC) indicate? 0000 The customers are unreliable in terms of purchases The marketing is effective The demographic has shifted The marketing is ineffective
Answer
4.4
(231 Votes)
Mia
Veteran · Tutor for 11 years
Answer
3. The demographic has shifted 4. The marketing is ineffective
Explanation
To understand what a high Customer Acquisition Cost (CAC) indicates about a company's customers, we need to analyze the concept of CAC and its implications. Customer Acquisition Cost is a metric used to determine the total average cost a company spends to acquire a new customer. This includes marketing and advertising expenses, sales team expenses, and any other costs directly related to attracting and converting new customers.1. **The Customers are Unreliable in Terms of Purchases**: High CAC does not necessarily indicate that customers are unreliable in terms of purchases. Instead, it reflects the cost incurred to acquire the customers, not their purchasing behavior.2. **The Marketing is Effective**: High CAC does not imply that marketing is effective. In fact, a high CAC often suggests the opposite. If the marketing were effective, the cost to acquire each customer would typically be lower, as more efficient marketing would lead to higher conversion rates for less expenditure.3. **The Demographic has Shifted**: A high CAC can suggest that the demographic has shifted. If the target market becomes more expensive to reach or if there is increased competition for the same demographic, the CAC can increase. However, this is not a direct indication but rather a possible inference.4. **The Marketing is Ineffective**: A high CAC could indicate that the marketing strategies are ineffective. If the company is spending a lot on marketing but not seeing a proportional increase in the number of customers, it suggests that the marketing efforts are not yielding the desired results efficiently.Therefore, the two aspects of a company's customers that a high CAC could indicate are the possibility of a demographic shift and the ineffectiveness of marketing strategies.