Understanding Customer Acquisition Cost (CAC) is mission critical to making informed business decisions, especially when it comes to allocating budget for sales & marketing personnel.
Multi-touch attribution, a marketing methodology that tracks and assigns value to each interaction a customer has with your brand, can be an advantageous approach to calculating CAC accurately.
Here are 5 ways how:
1. Allocating Costs Across Touchpoints
Traditional single-touch models (e.g., first-touch or last-touch) oversimplify marketing attribution, often leading to skewed calculations of CAC.
By distributing value to all interactions a customer has with your brand, from their initial awareness to final purchase, multi-touch attribution can ensure costs are allocated to each of these touch points.
This approach leads to a better understanding of the investments required to acquire a customer.
2. Linking Spend to Outcomes
Marketing teams tend to struggle with connecting their spending to actual sales outcomes.
Multi-touch attribution can connect marketing spend (e.g., Paid Ads, email campaigns, in-person events) to customer actions, sales engagement levels, and revenue generation.
This linkage enables teams to calculate the cost associated with acquiring qualified leads and paying customers.
3. Highlighting Inefficiencies
Without clarity on touchpoint performance, businesses risk over-investing in low-impact channels and marketing activities.
By highlighting how each channel contributes to conversion, multi-touch attribution can help identify both well performing and underperforming efforts.
This allows organizations to reallocate budget effectively, reducing wasted spend and driving down CAC.
4. Capturing the Full Buyer Journey
Buyers interact with multiple touch points before converting, and traditional models often fail to account for the complexity in these journeys.
By tracking every interaction, multi-touch attribution provides a comprehensive view of the buyer journey. This enables accurate attribution of costs to each stage of the funnel, from awareness to decision-making, ensuring no critical touchpoint is overlooked.
5. Enabling Smarter Forecasting
Historical CAC calculations often lack the granularity needed to forecast effectively and make business predictions.
With detailed insights into which touchpoints drive conversions, organizations can more accurately forecast future CAC.
This empowers teams to allocate resources efficiently and predict outcomes with greater confidence.
6. Aligning Sales and Marketing Efforts
A lack of visibility into cross-team contributions leads to inefficiencies and misalignment, especially when considering marketing and sales teams.
By offering insights into how both marketing and sales efforts influence CAC, multi-touch attribution fosters collaboration. It ensures that both teams are aligned in their goals to reduce acquisition costs while maintaining lead quality.
In Summary
Multi-touch attribution offers organizations a precise, data-driven approach to calculating Customer Acquisition Cost (CAC). By accounting for the complexity of modern buyer journeys and connecting costs to outcomes, it not only provides clarity but also equips teams with actionable insights to optimize their efforts.
The result? A more efficient allocation of resources, improved decision-making, and sustainable growth.
To dive deeper into how to implement a multi-touch attribution system in your organization, stay tuned for future articles.
