In a relationship heavy industry like AEC, the traditional customer acquisition cost formula should be based on per relationship, not per project.
Don't get me wrong. Project acquisition cost is also great to track but earning and keeping customers is a company metric that should be measured and improved.
It is one of those metrics that helps make good business decisions on:
- opening a new office location
- entering a new market
- acquiring or merging with another company
- client feedback loops
Scenario A: If your company spends $100,000 on winning a new client and that first project is worth $1,000,000 then you may have wasted company resources. However, if they have consistent projects for you and those projects add up to $20,000,000 over 5 years then that initial $100,000 investment paid off.
Scenario B: If your company spends $100,000 on winning a new client and that first project is worth $10,000,000 then that may be a good customer acquisition cost. But if you find yourself having to constantly "entertain" this client to be in their good graces then that initial investment may be a waste.
If you have a potential client who enjoys spending a lot time with your team members but no work is coming from that relationship, then you may be overspending on your acquisition cost.
This may come across as a no-brainer, but I'm going to talk about customer acquisition costs as it relates to the AEC industry. Customer acquisition cost is how much does it take your business to acquire a new customer. For the AEC industry, which is B2B, very service heavy, my advice is, you're going to measure it based off of per relationship, not per project.
A lot of firms get that a little bit muddied, because they may be doing a project acquisition cost, which is still good to track, but the customer acquisition cost is based off of per relationship. So your company may have multiple projects with a customer, which is ideal, but again, how much is your company spending to not only acquire that customer, but then to keep acquiring that relationship over time.
The AEC industry, like a lot of other B2B heavy service industries is very relationship heavy, and that's what we want to measure. Because if you're spending too much time, energy, money to go after a client, it may not actually work well for your business. Depending on where your business is today you want to ask yourself "is this going to be a good client for us going forward?"
The less money you spend, the less time and energy it takes to win a great client, cool. Let's keep that a repeatable play. But that's where that customer acquisition cost formula comes in.
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