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Measuring acquisition cost

One spend figure.
Three very different costs.

A practical guide to separating cost per enquiry, cost per qualified lead and cost per customer. One spend figure divided by three different counts gives three very different costs. Define the denominator, state what the spend includes and allow for sales-cycle delay before judging whether a cost has risen or fallen.

Start with the event you are counting.

An enquiry is an initial response. A qualified lead meets agreed criteria. A customer has reached the business’s defined purchase state. These counts represent different progress through the journey and should not share an ambiguous label called conversions.

Choose one period and document how each record enters it. Cohort-based progression and calendar-period totals can produce different pictures when sales take time.

Calculate each measure explicitly.

Measure Calculation
Cost per enquiry Included spend ÷ enquiries
Cost per qualified lead Included spend ÷ qualified leads
Cost per customer Included spend ÷ customers

A worked example, not a benchmark.

Suppose a hypothetical campaign has 10,000 in included spend, 100 enquiries, 25 qualified leads and 5 customers. The three costs are 100, 400 and 2,000 in the same currency. No conversion between currencies is involved.

The example illustrates arithmetic only. It says nothing about an appropriate target for a particular industry or business.

One spend figure, three different costs: 10,000 in included spend with 100 enquiries, 25 qualified leads and 5 customers gives a cost per enquiry of 100, a cost per qualified lead of 400 and a cost per customer of 2,000. hypothetical campaign 10,000 in included spend Enquiries 100 Qualified leads 25 Customers 5 Cost per enquiry 100 Cost per qualified lead 400 Cost per customer 2,000

Decide what belongs in spend.

Media-only cost and fully loaded acquisition cost are different measures. State whether creative, agency, sales and tooling costs are included. Compare like with like, and avoid calling media cost per customer your complete customer-acquisition cost when it excludes relevant expenditure.

Check the counts before reading the trend.

  1. Remove or separately label duplicate and invalid records according to an agreed rule.
  2. Apply the same qualification criteria across the comparison.
  3. Allow for sales-cycle delay when judging customer progression.
  4. Investigate counts where qualified leads exceed enquiries or customers exceed qualified leads.
  5. Treat a zero denominator as an unavailable cost, not zero cost.

Turn the calculation into a decision.

A rising cost can reflect weaker demand, tighter qualification or a timing difference. Review the underlying records before changing spend. The question is which stage changed, and why.

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