In a nutshell
Getting your new customers has a price (Customer Acquisition Cost) and could take time (Customer Acquisition Rate). If your customer acquisition is cheap and easy it will most probably play for you while if it takes time and/or it is expensive it will play against you when building your marketing strategy. These metrics are important to measure and pilot for your Marketing Strategy.
In the Marketing Canvas
In the Marketing Canvas, we have identified 6 main categories for building your Marketing Strategy: Customers, Brand, Value Proposition, Journey, Conversation and Metrics. Each of these categories, have 4 dimensions which means that a total of 24 dimensions (6 by 4) are defining your Marketing Strategy.
Acquisition is one of the 4 dimensions of the Metrics category.
How to use it?
In your Marketing Strategy, the user/customer acquisition is a fundamental metric to drive. Getting more users (and paid users) is a necessary condition for surviving. We have seen that you can already play with 20 dimensions (see More on the Marketing canvas below) for fine-tuning your Marketing Strategy. Now, let’s zoom on acquisition. It has always been a very important topic in the past but these days the GrowthHacking movement is reinforcing the important of it. You can measure Customer Acquisition with 2 KPIS:
Customer Acquisition Rate (CAR)=Number of customer acquired/Length of time period.
Cost of Customer Acquisition (COCA or CAC)=All the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent.
All businesses and thus your business has a CAR and a COCA. These numbers are telling us how fast you are getting new customers and how much it costs you to get them.
COCA is defined by Neil Patel as the cost of convincing a potential customer to buy a product or service.
COCA and specifically COCA per media will indicate how much you spend in this specific media for acquiring a customer for a defined period. This compare to benchmarks and competitors (if information is available) will give you indication about your performance.
If your CAR is above your competitors, it means that you need more time to get more users than your competitors. It is not dramatic as other dimensions should be observed (like ARPU) for understanding if your business has a real problem. At least, it is a brake to your goal.
You could argue that this is only applicable to service business and not products. Indeed, the philosophy behind the canvas is based on the hypothesis that you should know your customers. If you distribute your product indirectly and have no information on your customers, you will probably face (or already facing) an issue as you want be able to personalised your offer. Therefore, not being able to answer on acquisition because you have no relationship with your clients and therefore you are not able to measure CAR and COCA is a Brake for the Marekting Canvas Method.
Is the Acquisition of new users helping you achieve your goals?
Neil Patel, Customer Acquisition Cost, https://neilpatel.com/blog/customer-acquisition-cost/