John Wanamaker, a successful U.S. merchant and businessman who was considered by some as a pioneer in marketing, is credited with saying, “Half the money I spend on advertising is wasted; the trouble is I don't know which half.” Mr. Wanamaker passed away in 1922, and he might be surprised to find that today, much of our marketing has shifted online and we have data analytics to provide some insight into whether our advertising efforts are worth the money we pay.

Customer Acquisition Cost—What is it?

One definition of Customer Acquisition Cost (CAC) is the total marketing expense divided by the total number of new customers acquired. Let us use Acme Relocation Systems as an example. Here are the annual expenses of Acme related to marketing to local moving consumers: (exit out of Zoom to see the table)

Through its move management system, Acme is able to record every single lead that comes to them whether it is a phone inquiry, a submitted web form, an e-mail, or through the lead generation company. Acme’s system also categorizes which marketing channel produced the lead. Here are their numbers for 2021: (exit out of Zoom to see the table)

Acme’s average CAC is $17,600 divided by 480 booked jobs, which equals $36.67. Their average Lead Acquisition Cost (LAC) is $17,600 divided by 4,160 leads which equals $4.23. Acme’s detailed recordkeeping in their move management system makes it easy to determine this expense for every lead category. For example, for IAMX E-Mail Leads, the CAC is $1,200 divided by 48, or $25. The LAC is $5.00.

Add Sales Costs to CAC

Many companies will add in their lead processing, filtering and sales costs to the CAC. (exit out of Zoom to see the table)

Margin Analysis & CAC

Acme is very disciplined about its use of its move management software and does a detailed job costing on each of its transactions. Using this information, they know their gross margins by job type: (exit out of Zoom to see the table)

Using this detailed margin analysis, Acme was able to determine that after applying the average cost of CAC against the average margin for local moves, their local move rates needed adjustment. They decided to discontinue their radio advertising which was generating mostly local move leads. Instead, they directed the money toward a campaign aimed at building relationships with key real estate firms in specific areas of their market.

Noting the strong data showing a dramatic increase in e-mail leads received from industry partners since they started placing Sponsored Ads in IAMX, they increased their budget for IAMX and finetuned their IAMX campaign to target users from specific countries. Additionally, they refined their Google Ad Word program to feature key words to attract more international leads.

Summary and Conclusions

Nearly a century after Mr. Wanamaker made his famous remark, we now have the tools necessary to understand how to adjust our advertising and marketing budgets with much more precision. If you are not using move management software in a disciplined way to record the details of each transaction from the lead initiation stage and following each lead to resolution as a booked or lost order, detailed analysis will be difficult. Margin analysis by move type, customer type and even traffic lane is an important part of understanding which parts of your business you wish to grow and where to direct your advertising spend.

You will also need access to detailed data analytics relating your online marketing campaigns. You can find the data on your company and your markets for the traffic received at IAM Mobility Exchange, for example, by clicking the link for IAMX Dashboard at the top of the IAMX web page.

For many companies, trade business from industry partners is an important and profitable aspect of their business mix. Recent changes in corporate purchasing and implementation of flexible relocation benefits have created new opportunities for companies in overseas markets to book business which would otherwise have been controlled by global contracts. This means the market for trade business and marketing to increase your engagement with industry partners has never been more important.

If you would like more information about the advertising opportunities with the IAM and IAM Mobility Exchange, please contact rdasilva@mobilityex.com.