Question
What formula is used to determine a company's customer acquisition cost (CAC)? Masseleting expenses+sules expenses / the number of new costompers of the periodd Malleting evenserses - solles expenges x the number of new customers for the period Macceleing expercents + slles expentes + the number of new costomes forttiee period Marcestion equapses - sollss expences/ftreanumber of neareastomess of to the pariod
Answer
4.2
(189 Votes)
Ryan
Professional · Tutor for 6 years
Answer
A
Explanation
The customer acquisition cost (CAC) is a key business metric that involves a calculation involving a business's marketing and sales expenses and new customers acquired. The options presented provide different mathematical relationships between these elements.The first option, 'Marketing expenses + sales expenses / the number of new customers for the period', is the correct representation of the CAC. To calculate this, you add together all the sales and marketing expenses then divide by the number of new customers acquired.The other options hint at different mathematical manipulations to reflect subtly different business metrics, none of which represent the CAC.'Marketing expenses - sales expenses x the number of new customers for the period', is incorrect because it suggests subtracting an overall expense from a calculated interaction between sales expenses and a numerical count (number of new customers), which does not make sense in the context of customer acquisition. Moreover, you don't subtract any values in the CAC calculation, but add marketing and sales expenses together. 'Marketing expenses + sales expenses + the number of new customers for the period', is a factor that typically wouldn't be used directly in assessing business efficiency because it adds a direct numerical count (in this case, new customers) to expenses, which include some implicit numeric quantification of customers through the sale expenses; Falta fazer sentido aqui.'Marketing expenses - sales expenses / the number of new customers for the period', misrepresents the CAC by proposing that the metric involves subtracting sales expenses from marketing expenses and then dividing the remaining expense by the number of new customers. This subtractive operation here again remove meaning away, failing to account for the totality of costs incurred on the two dimensions; marketing and sales to gain the new customers, and lower division concept would result in unrealistically low numbers for this business metric.