How To Calculate Cost of Acquisition Payback in SAP BusinessByDesign | Arithmix

Calculating the cost of acquisition payback is an essential part of any business strategy. It helps you determine the amount of time it will take for your investment to pay off and become profitable. In simple terms, it is the amount of time it takes for the revenue generated by a customer to exceed the cost of acquiring that customer. This calculation is crucial in determining the effectiveness of your marketing and sales efforts and helps you make informed decisions about future investments.

What Is Cost of Acquisition Payback?

The cost of acquisition payback is a metric that measures the time it takes for a business to recover the cost of acquiring a new customer. It is calculated by dividing the total cost of acquiring a customer by the revenue generated by that customer over a specific period. The result is the number of months or years it will take for the business to break even on that investment. This metric is essential for businesses to understand the effectiveness of their marketing and sales efforts and to make informed decisions about future investments.

For example, if a business spends $1000 to acquire a new customer and that customer generates $500 in revenue per month, the cost of acquisition payback would be two months. This means that it would take two months for the business to recover the cost of acquiring that customer and start making a profit.

When Is It Valuable To Calculate Cost of Acquisition Payback?

Calculating the cost of acquisition payback is valuable for businesses of all sizes and industries. It is especially important for businesses that rely heavily on marketing and sales efforts to acquire new customers. By understanding the cost of acquiring a customer and the time it takes to recover that cost, businesses can make informed decisions about future investments and adjust their marketing and sales strategies accordingly.

For example, if a business is spending a significant amount of money on advertising and not seeing a return on investment, calculating the cost of acquisition payback can help them determine if their efforts are worth continuing. If the cost of acquiring a customer is too high and the payback period is too long, the business may need to adjust their marketing and sales strategies to focus on more cost-effective methods.

In conclusion, calculating the cost of acquisition payback is an essential part of any business strategy. It helps businesses understand the effectiveness of their marketing and sales efforts and make informed decisions about future investments. By understanding this metric, businesses can adjust their strategies to focus on more cost-effective methods and ultimately increase profitability.

How Do You Calculate Cost of Acquisition Payback in SAP BusinessByDesign

SAP BusinessByDesign itself isn’t naturally geared towards letting you calculate complex metrics like Cost of Acquisition Payback. As an alternative, teams typically use products like Arithmix to import data from SAP BusinessByDesign and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like SAP BusinessByDesign, combine it with data from other systems, and create calculations like Cost of Acquisition Payback.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Cost of Acquisition Payback in Arithmix

Calculating metrics like Cost of Acquisition Payback is simple in Arithmix. Once you've created your free account, you’ll be able to import your SAP BusinessByDesign data, and use it to create natural language formulas for metrics like Cost of Acquisition Payback.

Arithmix is designed to give you the power to build any calculations you want on top of your SAP BusinessByDesign data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.