Customer Acquisition & Growth
August 22, 2023

How to Measure Customer Acquisition

How to Measure Customer Acquisition

The ability to accurately measure customer acquisition has emerged as a cornerstone of success for businesses. Measuring customer acquisition helps you evaluate marketing strategies, optimise budgets, and grow your business.  

Every successful business understands the importance of tracking the ROI of marketing efforts, which often involves measuring customer acquisition.

Analysing how customers interact with your brand allows you to assess your marketing strategies. This knowledge helps you allocate resources, refine strategies, and maximise marketing results.

Consider how much easier it would be to grow your business and turn a profit if you had a map guiding you towards growth and profitability. This is precisely what measuring customer acquisition provides. It is a strategic compass that helps you make informed decisions and grow sustainably.




What are Customer Acquisition Metrics &    
Why Measure Them?

These metrics are data-driven insights into how your audience interacts with your brand and how well your strategies work. From understanding the costs of gaining a new customer to tracking the value they bring over time, these metrics ultimately propel your business towards sustainable growth.

The Significance of Measuring Customer Acquisition Metrics

  1. Data-Driven Decision-Making: Measuring customer acquisition metrics adds objectivity to the decision-making process. These metrics provide quantifiable evidence for resource allocation, campaign optimisation, and strategy adjustments.

  2. Performance Evaluation: Customer acquisition metrics serve as a yardstick to measure the performance of marketing initiatives. They provide a clear view of the best campaigns and those that need adjustment or termination. 

  3. Return on Investment (ROI) Clarity: Businesses spend time and money to acquire customers. By measuring acquisition metrics, they can accurately calculate investment ROI. This clarity is essential for resource optimisation and showing stakeholders the effectiveness of marketing efforts.

  4. Strategy Optimisation: The feedback mechanisms provided by metrics allow you to iterate and perfect your strategies. This could mean refining target audience segments, fine-tuning messaging, or altering distribution channels.



Top Customer Acquisition Metrics 


1) Customer Acquisition Cost (CAC)


Definition and Calculation

CAC is at the forefront of acquisition metrics. It is the total cost of getting one new customer. It gives you a full picture of all the costs you have incurred during your marketing and sales processes. To calculate CAC, just divide the total cost of getting new customers by the number of new customers gained during a certain time period.


CAC = Total Acquisition Costs / Number of New Customers Acquired

Importance of Tracking CAC

Tracking CAC is essential for making informed decisions and optimising resources. By understanding CAC, you can assess the efficiency of your acquisition strategies, allocate your resources optimally, and refine your campaigns for better results. 

Monitoring CAC also allows for data-driven decision-making. This helps marketers identify the channels and initiatives that yield the best return on investment.



2) Customer Lifetime Value (CLV)

Understanding CLV

CLV is a metric that extends beyond the initial transaction to estimate the total revenue a customer generates for your brand. It's derived from factors such as the average purchase value, purchase frequency, and customer retention rate. 

The formula for calculating CLV may vary based on the complexity of your business model. However, at its core, it revolves around predicting future revenue streams.

How CLV Impacts Acquisition Strategies

CLV transforms customer acquisition from a short-term effort into a long-term strategy. Businesses that gather CLV insights can make informed decisions about the resources they allocate for acquiring and retaining customers. 

Your high-CLV customers become focal points for personalised marketing efforts and retention initiatives. Nurturing these relationships can yield substantial returns over time.


3) Conversion Rate

Defining and Calculating Conversion Rates

Your conversion rate is a key metric that measures the percentage of leads who become customers. Conversion could mean making a purchase or signing up for a service. To calculate your conversion rate, divide the number of conversions by the total number of visitors or prospects and multiply by 100.

Conversion Rate = (Number of Conversions / Total Number of Visitors) x 100

Analysing Conversion Rate Trends

Conversion rates measure the effectiveness of your sales funnel. By analysing trends over time, you can identify which channels, campaigns, or pages are driving the most revenue. This information empowers you to fine-tune your strategies, experiment with different approaches, and enhance user experiences to maximise conversions.


4) Churn Rate

The Impact of Churn on Customer Acquisition

Your churn rate represents the percentage of customers who discontinue their relationship with your business within a specific period. Due to the constant need to acquire new customers to offset losses, high churn can undermine customer acquisition efforts. Churn not only reduces the value of acquired customers but also raises the overall cost of sustaining growth.

Calculating and Minimising Churn

Churn rate = (Lost Customers / Total Number of Customers at the Start of the Time Period) x 100. 


For instance, if you lose 15 customers out of the 730 you had at the start of the month, your churn rate would be 0.02 (15/730).

To minimise churn, invest in proactive customer retention strategies like providing personalised experiences. You should also prioritise excellent customer service, and addressing pain points that lead to attrition.


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Other Metrics to Track

These additional metrics provide deeper insights into customer behaviour and the effectiveness of your acquisition efforts:

  • Order Frequency: This metric reveals how often customers make purchases within a specific period. It's crucial for understanding customer engagement and tailoring marketing strategies accordingly.

  • Average Order Value: The average order value is the typical amount a customer spends in a single transaction. Increasing this value can boost revenue without acquiring more customers.

  • Shopping Cart Abandonment Rate: This metric measures the percentage of users who add items to their carts but don't complete the purchase. It offers insights into potential friction points in the buying process. 

  • Referral Source: Understanding where your customers are coming from (e.g., organic search, social media, referrals) provides insights into the effectiveness of different acquisition channels.

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Tools and Methods for Measuring Customer Acquisition

The tools and methods for measuring customer acquisition have grown over time. With the help of these resources, you can supercharge your acquisition efforts and gain actionable insights. Let's explore some of the key tools and methods that enable accurate measurement and analysis.

Google Analytics and Other Tracking Tools

Google Analytics is a cornerstone in the world of web analytics. It gives you a full picture of website traffic, user behaviour, and conversion patterns. It reveals information about traffic sources, demographics, and bounce rates, among other things. 

Beyond Google Analytics, there are several other tracking tools available, like Semrush. These tools allow marketers to precisely monitor and optimise their strategies for specific platforms and channels. 

A/B Testing for Acquisition Strategies

A/B testing, or split testing, is an effective way to optimise acquisition strategies. It involves creating two versions (A and B) of a marketing element (e.g., an email subject line, a landing page, or an ad) and testing them with different segments of your audience. By comparing the performance of these variations, you can identify what resonates with your audience and improve your acquisition strategy.

Customer Surveys and Feedback

Direct insights from customers can be invaluable for understanding their acquisition journey. Use surveys and feedback to ask customers about their experiences, preferences, and pain points. Their responses provide qualitative data that complements quantitative metrics. You can better understand customer acquisition with qualitative data that quantitative metrics may not provide.

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Techniques for Optimising Customer Acquisition 

Implementing effective techniques ensures that your efforts resonate with your target audience, foster loyalty, and maximise your ROI. Let us take a look at some effective strategies that can boost your efforts to bring in new customers.

Target Audience Analysis

Building Detailed Buyer Personas

Knowing your target market is the first step toward successful acquisition. Developing detailed buyer personas entails creating profiles to represent various sectors of your target demographic. These personas go into detail on demographics, interests, pain points, and buyer behaviour. This information allows you to properly tailor your strategies to what resonates with each buyer persona.


Loyalty Programmes

Creating Extra Value Beyond Your Products and Services Alone

Loyalty programmes go beyond transactional relationships. They offer customers additional value, whether through exclusive discounts, rewards, or personalised experiences. These programmes cultivate a sense of belonging and encourage repeat business.

Over 90% of companies have a loyalty programme. 

Rewarding Customer Loyalty

Recognising and rewarding loyal customers strengthens their emotional connection with your brand. Incentives could be tiered rewards, birthday discounts, or special offers for long-standing customers. These incentives foster loyalty and can lead to word-of-mouth recommendations.


Social Media and Paid Advertising

Leveraging Social Platforms for Acquisition

Social media is a powerful acquisition channel. Platforms like Facebook, Instagram, and LinkedIn provide targeted advertising options that allow you to reach specific demographics, interests, and behaviours. Leveraging engaging content, influencer partnerships, and interactive campaigns boosts your brand's presence and attracts potential customers.

Tracking Ad Performance and ROI

While creating compelling ads is essential, tracking their performance is equally crucial. Tools like Facebook Ads Manager and Google Ads offer insights into click-through rates, conversion rates, and other key metrics. By analysing this data, you can optimise your ad campaigns for a better ROI.


Referral and Affiliate Programmes

Encouraging Word-of-Mouth and Partnerships

Referral and affiliate programmes leverage the power of word-of-mouth marketing.


Reports suggest that referral programmes can help grow revenue 86% faster.


Satisfied customers become advocates, referring friends and family to your business. Affiliate partnerships extend this concept by collaborating with influencers or partners who promote your products or services in exchange for a commission.

Measuring the Impact of Referrals on Acquisition

Effectively measuring the impact of referrals requires tracking the source of each new customer. You can track which existing customers brought in new ones by providing unique referral codes or links. Tracking this data helps quantify the success of your referral programme.

Each of these techniques has the potential to enhance your customer acquisition efforts. By combining them strategically and adapting them to your unique business needs, you can create a comprehensive acquisition strategy that drives sustainable growth.


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Key Takeaways

  • The Significance of Measuring Customer Acquisition Metrics

    • Data-Driven Decision-Making

    • Performance Evaluation

    • Return on Investment (ROI) Clarity

    • Strategy Optimisation

  • Top Customer Acquisition Metrics

    • Customer Acquisition Cost (CAC)

    • Customer Lifetime Value (CLV)

    • Churn Rate

    • Conversion Rate

  • Other Key Metrics to Track

    • Order Frequency

    • Average Order Value

    • Shopping Cart Abandonment Rate

    • Referral Source

  • Tools and Methods for Measuring Customer Acquisition

    • Google Analytics and Other Tracking Tools

    • A/B Testing for Acquisition Strategies

    • Customer Surveys and Feedback

  • Techniques for Optimising Customer Acquisition

    • Target Audience Analysis

      • Build Detailed Buyer Personas

    • Loyalty Programmes

      • Create Extra Value Beyond Your Products and Services Alone

      • Reward Customer Loyalty

    • Social Media and Paid Advertising

      • Leverage Social Platforms for Acquisition

      • Track Ad Performance and ROI

    • Referral and Affiliate Programmes

      • Encourage Word-of-Mouth and Partnerships

      • Measure the Impact of Referrals on Acquisition

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