How To Calculate Cost of Acquisition Ratio in HubSpot CRM | Arithmix

Learn how to calculate the cost of acquisition ratio in HubSpot CRM with our step-by-step guide. Improve your business decision-making by understanding the true cost of acquiring new customers.

Calculating the cost of acquisition ratio is an essential part of any business's financial analysis. It helps you determine how much it costs to acquire a new customer and whether that cost is worth the investment. In this article, we will discuss what the 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 financial metric that measures the cost of acquiring a new customer compared to the revenue generated from that customer. It is calculated by dividing the total cost of acquiring a new customer by the revenue generated from that customer. The cost of acquisition ratio is an important metric because it helps businesses determine the profitability of their marketing and sales efforts.

For example, if a business spends \$1000 on marketing and sales efforts to acquire a new customer and that customer generates \$2000 in revenue, the cost of acquisition ratio would be 0.5. This means that for every dollar spent on acquiring a new customer, the business generates two dollars in revenue.

When Is It Valuable To Calculate Cost of Acquisition Ratio?

Calculating the cost of acquisition ratio is valuable for businesses of all sizes and industries. It is particularly useful for businesses that rely on repeat customers or have a high customer lifetime value. By understanding the cost of acquiring a new customer, businesses can make informed decisions about their marketing and sales strategies.

For example, if a business has a high cost of acquisition ratio, it may be more cost-effective to focus on retaining existing customers rather than acquiring new ones. Alternatively, if a business has a low cost of acquisition ratio, it may be worthwhile to invest more in marketing and sales efforts to acquire new customers.

How to Calculate Cost of Acquisition Ratio

Calculating the cost of acquisition ratio is a straightforward process. To calculate the cost of acquisition ratio, follow these steps:

1. Determine the total cost of acquiring a new customer. This includes all marketing and sales expenses, such as advertising, sales commissions, and lead generation costs.
2. Determine the revenue generated from the new customer. This includes all sales revenue, as well as any recurring revenue generated from the customer over time.
3. Divide the total cost of acquiring a new customer by the revenue generated from that customer to get the cost of acquisition ratio.

It is important to note that the cost of acquisition ratio should be calculated over a specific period of time, such as a month or a year, to provide an accurate representation of the business's marketing and sales efforts.

In conclusion, calculating the cost of acquisition ratio is an important part of any business's financial analysis. By understanding the cost of acquiring a new customer, businesses can make informed decisions about their marketing and sales strategies and improve their profitability over time.

How Do You Calculate Cost of Acquisition Ratio in HubSpot CRM

HubSpot CRM 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 HubSpot CRM and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers you'll powerful yet easy to use. With Arithmix you can import data from systems like HubSpot CRM, 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.