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Any good resources for customer acquisition costs of comparable services?

We're building an online educational marketplace, and are having hard time understanding what our CAC is going to look like. We ran a pilot course with CAC of absolutely zero, through an affiliate who sent mass emails that resulted in paying users. This is obviously not sustainable at scale. We are going to run experiments with adwords etc, but I was wondering if there are any online resources with info re CAC of existing companies out there. Obviously, companies are not happy to share this data, but maybe market analysis reports or bloggers who estimated those? I saw several discussions here about how to estimate CAC, but not about how to find data about comparable companies. I'm especially interested in online courses platforms (Coursera, edX, Udemy, Lynda, ...), marketplaces (Uber or AirBnb in their early days...), and platforms like kickstarter or indiegogo. Thanks!

5 Replies

Paul O'Brien
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Paul O'Brien Entrepreneur • Advisor
Tech Economic Development and VC CMO
Frankly, get going with your adwords test. There is no other dataset nor platform so comprehensively used that it's performance approximates a real market. With search data (volume, trends, CPCs, and your performance) you can extrapolate everything else from the size of the market and cost to acquire therein, to the relative CAC from other channels.

By that token, it's also the only way to get a valid sample of what comparable companies' CAC might be. Why? Keep in mind the unique context of search marketing - it is an intent based audience. That means, it's the only channel through which you can draw some valid assumptions that YOUR performance from a sales based ad on a specific keyword pointing to a similar landing page approximating that of what your comparables experience. To do the same on Facebook, email, or other channels removes the context of intent and creates any other number of use cases that result in THEIR experience advertising there differing from your experience (i.e. targeting, audience, cpc, etc.).

It's not easy to do as you further need to draw some assumptions about brand strength, existing awareness (or lack thereof), and accessibility on various platforms (you could run the exact same ad, landing page, and have equivalent brand strength as a comparable but if they are on iOS and Android and you're only on Android...).
Mana Ionescu
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Mana Ionescu Entrepreneur
President, Lightspan Digital: Digital Marketing Problem-Solver and Speaker
"CAC of absolutely zero" is impossible. And I'm assuming you're talking about "customer acquisition cost," not the military CAC. So let's be honest here... But if it's true, then keep looking for more affiliates. At some point you'll need to expand into other channels and follow Brian's advice. In the online ed space we've seen CPA (cost per acquisition) range between $60 and $800 (at MBA program level). The lower cost leads come from affiliatesources but they also turn out to be the worst customers (retention is very low and customer lifetime value is lowest of all channels). So you'll just have to run tests via different channels and markets and make projections based on your test numbers and then watch to see which lead source is most profitable in the long term.
Stephen Palmer
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Stephen Palmer Advisor
Grand Master, Sovereign White Knights - 6 Peaceful Orders
Website with good pages and good meta phrases [SEO's] are your best bet. but may need a very good server system with high Storage capacity and hot swap drives; Apache OS and/or Linux/Apache. Your own ISP status on leased lines are then possible. your client base will appreciate privacy and security built into your system, and flock to you by the thousands. Social Media for the most part is bull-crap; Responsible media such as professional sites like Medscape and Research Gate have a lot to offer in collaborative efforts, as does Mbendi in South Africa; They have been in business since the mid 1990's online, and by Telnet prior to that. But if you follow Microsoft or Apple, you may die on the vine, openSuse and Ubuntu server software is free, and the 4500 other programs available for them, You may need to run a secondary server for IIS and DNS at another location but connected by VPN so you never actually go down. Privacy, Speed and Reliability, costs are minimal, about 15 RMB or 5 dollars per customer.
Karl Schulmeisters
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Karl Schulmeisters Entrepreneur
CTO ClearRoadmap

I don't think Adwords will give you an accurate view of your CaC since AdWords have very different effects during intial deployment vs 6 mos in.

Mana's point about impossibility of having CaC at zero unless all your OpEx and CapEx depreciation costs are zero (which is why Mr. Palmer's "free" advice is off the track) since you are spending SOMETHING to at least create the collateral.

Stephen Palmer
0
0
Stephen Palmer Advisor
Grand Master, Sovereign White Knights - 6 Peaceful Orders
I believe Karl missed the primary point, its not ads, it is new customer aquisition, iif it was not about expensive systems, they would not keep pushing it their way. The higher level above the adwords is not off-point, it is the higher position on the algorithm. What you want and need is less cost for acquisition per customer, but if you are stuck on a single principal further down the rabbit hole, then stay with Karl, he will lead you to the 300 to 800 Euro per customer account cost.
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