Question

Topic: Research/Metrics

Seeking Benchmarks For Cac For Web Businesses

Posted by david on 5/1/2014 at 6:55 PM ET 250 Points
Help! We are launching a new web-based business providing consumer advice for an affluent niche market, numbering in the millions of consumers worldwide. We are struggling to forecast customer acquisition costs (CAC) in support of our business plan.

Are there any existing benchmarks we could look to for guidance on typical CAC (either absolute cost or as percentage of lifetime value) for web-based consumer service businesses?

Thanks in advance...
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RESPONSES

  • Posted by koen.h.pauwels on 5/2/2014 at 3:50 AM Accepted
    very important and tough question...it all depends on the customer target and your communication plan in terms of channel, message etc. Your affluent customer is typically harder to catch (especially getting their attention and being considered). Several hundreds of dollars are often spent to get 1 affluent customer. What is your comparative advantage to their existing solutions? Have you found a channel or a place that is great to reach them? example from survey research: affluent managers are far more willing to spend 10 minutes on an exciting survey/assessment when waiting for their planes in airports
  • Posted by mgoodman on 5/3/2014 at 12:21 PM Accepted
    Not sure there are any existing benchmarks, because each product/market situation is unique. And the CAC is often a function of specific copy, positioning, etc. So even if there were a "benchmark" (e.g., $500-1,000 per new customer, or 65-75% of lifetime value, etc.) that would assume the appeal of your copy and positioning are somehow "average." The variation around "average" can be significant -- the difference between success and failure.

    Better to approach this in a different way, IMHO.


    P.S. There are some market research techniques that will estimate parameters for you. If interested, let me know.
  • Posted by david on 5/9/2014 at 9:59 AM Author
    Thanks to those who have responded, but unfortunately nobody seems able to point to any actual benchmarks. While I understand that CAC depends greatly on a wide variety of factors related to the business plan and target market, I am quite certain that this is a key metric for any marketing & sales organization, and that benchmarks do exist. Unfortunately it seems nobody in this community has access to such benchmarks, or is willing to share that information, so I shall have to continue my research elsewhere :-\
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