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What Should I Budget For New Customer Acquisition

Categories - Strategy

Budgeting and marketing are consistently heard in the same sentence. Rightfully so I many regards, but other times not as much. Overall budget spend is usually spoken about much to early in the marketing process, which can lead to either under funding or over funding your marketing efforts. In both cases leading to sub-optimal results.

At Ciphers, we like to think of addressing this problem with a system of questions to fully uncover the businesses needs.

  1. What is the Annual Revenue per client?
  2. Overall, What is the average Customer Lifetime Value?
  3. Currently, What is the Cost of Acquisition per client?
  4. Over the last 12 months, What is your customer retention rate?

See our blog post here for formulas to gather the above data.

Once you have calculated the above metrics, you can assign values to your marketing spend and make better, data driven decisions.

Once you have understood the above data, you will want to sit with your executive team to understand what your company goals are. We usually outline three goals you can set.

  1. Growth – You want to achieve consistent growth year over year
  2. Complacency – You want to maintain the same number of clients year over year
  3. Decline – You do nothing.

After understanding your goals, and your raw data, the next step is to develop a corresponding budget for you marketing department or your digital marketing partners.

To gain further insight into how to set up a Break-Even Budget, Minimally Effective Budget, or a Maximum Budget for your goals schedule a time with our client success team here.