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Customer Acquisition Efficiency Ratio measures how effectively a business uses its marketing and sales expenses to gain new customers. It compares the revenue generated from new customers to the cost spent acquiring them.
Synonyms: Customer Acquisition Efficiency, Customer Acquisition ROI, Customer Acquisition Cost Efficiency, Customer Acquisition Performance Ratio
The ratio is calculated by dividing the revenue earned from new customers by the total cost of acquiring those customers. A higher ratio means the company is getting more revenue for each dollar spent on customer acquisition, indicating better efficiency.
Tracking this ratio helps businesses understand if their marketing and sales efforts are cost-effective. It highlights whether the money spent on acquiring customers is justified by the revenue those customers bring in.
If a company spends $10,000 on marketing and sales and gains new customers who generate $50,000 in revenue, the ratio is 5. This means for every dollar spent, the company earns five dollars back. A ratio below 1 suggests the company is spending more than it earns from new customers.
