How To Calculate Cost of Acquisition Ratio in Drift | Arithmix

Calculating the cost of acquisition ratio is an important step in understanding the effectiveness of your marketing campaigns. This ratio helps you determine how much it costs to acquire a new customer, and it can be a valuable tool for businesses of all sizes. In this article, we'll explore what the cost of acquisition ratio is, why it's important, and how you can calculate it in Drift.

What Is Cost of Acquisition Ratio?

The cost of acquisition ratio is a metric that measures the cost of acquiring a new customer compared to the revenue that customer generates for your business. It's calculated by dividing the total cost of acquiring a customer by the total revenue that customer generates over a specific period of time. This ratio can help you determine the effectiveness of your marketing campaigns and identify areas where you can improve your customer acquisition efforts.

For example, if your business spends $1,000 on marketing and sales efforts to acquire a new customer, and that customer generates $2,000 in revenue over the course of a year, your cost of acquisition ratio would be 0.5. This means that for every dollar you spend on acquiring a customer, you generate $2 in revenue.

When Is It Valuable To Calculate Cost of Acquisition Ratio?

Calculating the cost of acquisition ratio can be valuable for businesses of all sizes, but it's particularly important for startups and small businesses that are looking to grow quickly. By understanding the cost of acquiring a new customer, you can make more informed decisions about where to allocate your marketing and sales resources.

For example, if you find that your cost of acquisition ratio is high, you may need to reevaluate your marketing and sales strategies to find more cost-effective ways to acquire new customers. On the other hand, if your cost of acquisition ratio is low, you may want to invest more heavily in your marketing and sales efforts to accelerate your growth.

Calculating the cost of acquisition ratio can also help you identify areas where you can improve your customer acquisition efforts. For example, if you find that your cost of acquisition ratio is high for customers who come from a particular marketing channel, you may want to focus on optimizing your efforts in that channel to reduce your costs and improve your overall ROI.

In Drift, you can easily calculate your cost of acquisition ratio by tracking the costs associated with acquiring new customers and the revenue generated by those customers over a specific period of time. By regularly monitoring this metric, you can make data-driven decisions about how to optimize your marketing and sales efforts to drive growth and improve your bottom line.

How Do You Calculate Cost of Acquisition Ratio in Drift

Drift 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 Drift 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 Drift, 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 Drift 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 Drift 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.