What is customer acquisition cost?

Why it matters for a contractor.

It is the honest version of cost per booked job, because it counts the parts of the process contractors usually leave out of the arithmetic.

The commonly omitted items are the ones that cost the most: the estimator's time and truck on visits that did not close, the office hours spent chasing, and the fee paid to whoever generated the demand. A cost per lead of a few dollars can sit inside an acquisition cost of thousands.

It is worth calculating once a year even roughly, because it reframes decisions. A show-rate improvement or a close-rate improvement often reduces acquisition cost more than a cheaper lead source would, and neither shows up in a media-only view.

Compare it against average ticket and gross margin rather than against an industry benchmark. What matters is whether a customer costs you a defensible fraction of what they are worth, and that ratio is specific to your trade and your market.

What to ask a vendor about it.

• What does a signed customer cost me all in, including estimator time?
• What fraction of average ticket is that, and is it trending?
• Would a better show rate cut it more than a cheaper lead source?
• Which channel has the lowest true acquisition cost, not the lowest lead cost?