How to Measure Customer Acquisition Cost


You may think that time tracking software is helpful only in employee monitoring. That it helps employers detect unethical behavior, frauds, or make sure people are paid for hours spent on work, not on surfing the net. But the truth is, time tracking software has an enormous capability for turning your business into a goldmine.

Not only does it help to keep track of time, monitor employee activities and their productivity, but also manage and allocate budget, resources, team, manage tasks and projects, and every other aspect of work. Have you ever wondered how time tracking software can help measure CAC (Customer Acquisition Cost)?

Today, if you want to prosper and reach as many people as possible, you need to be visible online. But to do so, you have to invest in marketing to reach out to as many people as you can. And to be able to invest, you need to know your CAC.

Why Is Customer Acquisition Cost Important?

According to Neil Patel, Customer Acquisition Cost is “the cost of convincing a potential customer to buy a product or service.”  It’s everything you do to gain new clients. There are various methods for that and only you can decide which will work best for you.

Nevertheless, they can bring you more customers/users. But you have to invest money and time into it. And there are 2 reasons for which monitoring CAC is important:

  1. You need to keep a hand on the budget. CAC costs are part of the overall budget, even if you decide to create a separate budget for CAC. But still, you need to control these costs to know how much has already been spent, how much you can spend, and what are your limits.
  2. If you have investors, sponsors or people who you cooperate with and who have their part in the budget or CAC strictly, you need to keep them informed about its state.

If you’re using some specific methods for acquiring new customers, you should always monitor costs related.

How to Include Customer Acquisition Cost in The Budget?

The easiest way to measure Customer Acquisition Cost is to make a simple calculation:

Promotional costs ÷ Number of new customers = CAC

While it may be easy for solopreneurs and people who have small businesses, it’s much more than this when it comes to larger organizations, especially those who hire many employees. Allocating a specific budget to promotional activities is much complex than it may seem.

You need to know specifically how much money is being spent on such activities and what are precise Customer Acquisition Costs.

This is where time tracking software comes to aid. Of course, not every time tracking software will be suitable. Some tools may limit your ability to use it for cost management. But with those more advances such as TimeCamp, you can easily use it as a tool for measuring client costs.

time tracking software for HR

Measure Your CAC with Time Tracking Software

Believe it or not, with the right time tracking software, you can calculate all costs and break them down to every cent. Such software can provide you with an organized structure of all your expenses. You’ll need it to accurately allocate and measure every part of your budget.

To precisely measure CAC as part of your budget, you can easily split the budget into 4 categories:

1. Marketing Costs

Marketing costs include all the costs related to promotional activities. But the problem here is that often many businesses underestimate them thinking that they’re not a big deal, while they are.

And so the costs can involve the following:

  • Regular salary for employees
  • Ads and costs necessary to create and place them in proper places
  • Copywriting and inbound marketing
  • Fees for software license
  • Marketing strategy and management
  • Customer service experience

You need to make sure you’re including these costs in your budget. Otherwise, you’ll be surprised how much money is spent on this type of marketing.

Time tracking can help you estimate how much money (and time) goes for each action, task, and project. Provided that you base on budgeting feature.

2. Labor

When talking about regular salary for employees, you should remember that part of your workforce is doing their normal tasks, even if they’re part of promotional activities. Especially, if you have a marketing team.

Tracking time here should be obligatory for every employee because it’s the only way to accurately calculate who is responsible for which task and how much time it takes them to finish their work. Also it’s important to understand the exact employee cost.

That way you can find out how much time it takes for different campaigns to be finished and how much money should be invested in specific activities.

In TimeCamp, you can use the billing feature to measure client costs related to CAC. This will allow you to set rates for specific projects. Time tracked will be available to you and your team in automatically generated reports. What’s more, in TimeCamp you can set rates for specific users and groups of users, specific projects, or for specific people in chosen projects.

All that for more flexible Customer Acquisition Cost measurement as well as for more details.

Check out our knowledge base for more details on Billing

3. Overhead

It’s important to include overhead. Why? Because promotional campaigns cannot take place without the use of equipment, software and special tools or rooms dedicated to specific activities. The ongoing business expenses are part of your business budget and have to be included here.

With tracking overhead you can gain even clearer view on Customer Acquisition Cost. After all, getting equipment, hiring offices, etc. is not free, you need to pay for it.

4. Billable & Non-billable time

It’s a common practice not to track side tasks. But even non-billable activities are part of acquiring new customers, for example, meetings, calls, emailing, and other small tasks.

Including it in the budget can help minimize the time necessary for repetitive tasks. It can automate, optimize work, and make it more efficient.

Here TimeCamp also has your back. No matter how many tasks you have, you can flexibly set whether they are billable or non-billable. All information will be included in reports, and you’ll be able to analyze how much time is spent on every activity.

Check out our knowledge base for more details on billable & non-billable time

To Wrap It Up

Treat every client as a project. Then, at the end of each month, you can see the exact CAC. These are the total costs. Using time tracking software to measure CAC can help you see every detail of it. Not only can you gain insight into the budget but also create a unified system for managing it. Additionally, your team can get more productive and organized, which can save lots of time and money.

As they say, time is money. So why not combine the two by using time tracking software?


How to Measure Customer Acquisition Cost

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