"Cost of Customer Acquisition" (CoCA) is an important metric no matter what business you are in. In real estate, where selling could be considered 100% of the time spent, CoCA, and reducing it, is the metric.
There are two very important things to know here:
- 1st - Reducing the CoCA is NOT about reducing costs, its about increating the number of customers with the same dollar.
- 2nd - There is no "right" method of calculating CoCA; choose one of my suggestions from previos blogs (or from this blog) and run with it. The important thing to remember is not to change the way you calculate this metric - It's not the number itself that has meaning, it is the movement of that number over time.
There are many different methods and scenarios to consider and calculate CoCA.
Simple Example: I want to make $95K/yr and I have $5K in miscellaneous OOP expenses totaling $100K in expenses (your salary is an expense to the business even if it is just you). Take that total and divide it by your new customers - let's say 100 new customers - cost of customer acquisition - $1000. Being a real estate agent, where I may make $5K-$6K per sale (or more) - that a pretty healthy return - I'll take 600% all day long.
Whether your an agent or a broker - know this metric, and measure it in any way you want - just do it the same way every time - be consistant.
One of the ways we are testing CoCA, in an attempt to reduce it, is to increase the number of leads, and thus customers, by doing some dense marketing around both "SOLD" properties and around "Open Houses". We are using multiple methods, some traditional and some unique to Dense Market, We will not only test our dense marketing for CoCA but will also test Diminishing Returns, another important metric not covered in this blog..
If you would like a copy of our findings and results, email me at rleonard@LightsOnGraphics.com - They should be available by October 1, 2016. Only the first 100 will be provided at no cost. Follow me on Twitter for progress reports @T4Leonard.
Quote: "Costs in Marketing should NEVER be about cost; it IS about diminishing returns on the next marketing dollar spent" ~rel