How To Calculate Cost of Acquisition Ratio in Blackbaud | Arithmix

Calculating the cost of acquisition ratio is an important metric for any business. It helps you understand the cost of acquiring new customers and how much you are spending on marketing and sales efforts. In this article, we will discuss what cost of acquisition ratio is, when it is valuable to calculate it, and how to calculate it.

What Is Cost of Acquisition Ratio?

The cost of acquisition ratio is a metric that measures the cost of acquiring a new customer. It is calculated by dividing the total cost of acquiring new customers by the total number of new customers acquired during a specific period. This ratio helps businesses understand the effectiveness of their marketing and sales efforts and how much they are spending to acquire new customers.

For example, if a business spends $10,000 on marketing and sales efforts and acquires 100 new customers during a specific period, the cost of acquisition ratio would be $100 per customer.

When Is It Valuable To Calculate Cost of Acquisition Ratio?

Calculating the cost of acquisition ratio is valuable for businesses in several ways. Firstly, it helps businesses understand the effectiveness of their marketing and sales efforts. If the cost of acquisition ratio is high, it may indicate that the business needs to re-evaluate their marketing and sales strategies to reduce costs and improve effectiveness.

Secondly, the cost of acquisition ratio helps businesses make informed decisions about their marketing and sales budgets. By understanding the cost of acquiring new customers, businesses can allocate their budgets more effectively and efficiently.

Lastly, the cost of acquisition ratio is valuable for businesses that are looking to grow and scale. By understanding the cost of acquiring new customers, businesses can set realistic growth targets and develop strategies to achieve them.

How to Calculate Cost of Acquisition Ratio

To calculate the cost of acquisition ratio, you need to determine the total cost of acquiring new customers and the total number of new customers acquired during a specific period. The formula for calculating the cost of acquisition ratio is:

Cost of Acquisition Ratio = Total Cost of Acquiring New Customers / Total Number of New Customers Acquired

For example, if a business spent $10,000 on marketing and sales efforts and acquired 100 new customers during a specific period, the cost of acquisition ratio would be:

Cost of Acquisition Ratio = $10,000 / 100 = $100 per customer

It is important to note that the cost of acquisition ratio can vary depending on the industry, target market, and marketing and sales strategies. Therefore, it is important to compare the cost of acquisition ratio to industry benchmarks and competitors to determine if it is reasonable and effective.

In conclusion, calculating the cost of acquisition ratio is an important metric for businesses to understand the effectiveness of their marketing and sales efforts and allocate their budgets more effectively. By following the steps outlined in this article, businesses can calculate their cost of acquisition ratio and make informed decisions about their growth strategies.

How Do You Calculate Cost of Acquisition Ratio in Blackbaud

Blackbaud itself isn’t naturally geared towards letting you calculate complex metrics like Cost of Acquisition Ratio. As an alternative, teams typically use products like Arithmix to import data from Blackbaud 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 Blackbaud, combine it with data from other systems, and create calculations like Cost of Acquisition Ratio.

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 Ratio in Arithmix

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

Arithmix is designed to give you the power to build any calculations you want on top of your Blackbaud 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.