December 3, 2015 | By RGR Marketing Blog

Calculating Cost Per Acquisition for a Solar Energy Installation Business

Are you struggling to justify the amount of time and money you’re currently spending to generate leads for your solar energy installation business? Getting your head wrapped around the myriad of factors that go into proving return on investment in marketing and advertising can be a full-time job in and of itself.

However, calculating cost per acquisition, or cost per sale, doesn’t have to be an all-consuming chore. Depending on how you are prospecting for leads, determining cost per acquisition can be relatively simple to do, and easy to understand. Read on for our quick guide to the basics of calculating cost per sale by channel.

Why Cost Per Acquisition Is the Metric That Matters Most

If you were inclined to, and had the time to calculate what every marketing effort you are currently spending energy and capital on was costing you, you’d discover a great deal regarding the relative cost of various types of marketing. However, without understanding what all those costs add up to in terms of their impact on actual sales, you are technically making comparisons in a vacuum.

If you divide your annual sales by the number of customers you did business with in a year, you can get a benchmark by which you can evaluate the relative value of your various marketing efforts. 

How to Calculate Cost Per Acquisition Across Channels

Because solar energy system installation is not an ecommerce business, tracking the spend-to-sale ratio for each individual customer can be tricky. Investing in a Customer Relationship Management (CRM) software can be the answer to pretty much all of your needs. However, if investing in CRM software isn’t a priority for you at the moment, the best thing you can do is to track where each and every lead resulting in a sale comes from.

Calculate the costs for each customer and aggregate them by channel to determine averages. Next, divide those averages by the number you generated. Do this by dividing your annual revenue by your customer count to determine the percentage of revenue spent to acquire an average customer through each marketing channel that you’re currently using.

Cost Per Acquisition Is the True Measure of Marketing ROI

If you’re at all concerned about the amount of money and time you and your team are spending on social media, content, advertising, and other forms of marketing, then calculating the cost per acquisition of your solar leads can help you determine each channel’s relative efficacy.

Beyond understanding the return on investment of your various marketing initiatives, cost per acquisition can also help you target where the best bang for your marketing dollar resides.

[Photo via: Adspert]

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