coca amicus011017

CSLB# 391670 ©2017 Solarponics

Solar EnergyCost of Customer Acquisition

Frank ScottiSolarponics, Inc, Atascadero, California

Linkedin.com/in/frankscottifrank@solarponics.com

An Amicus Solar Cooperative Presentation

Cost of Customer Acquisition

The following information is for demonstrative purposes only.

©2017 Solarponics

Cost of Customer Acquisition

1. What Is CoCA2. Calculating CoCA3. Job Estimating and CoCA4. Industry Standard CoCA?5. Budgets and CoCA6. Spending and CoCA7. Cost tracking and CoCA8. CLTV and CoCA10. Our internal Aha!

Cost of Customer Acquisition

What is Cost of Customer Acquisition?

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Cost of Customer Acquisition

What is Cost of Customer Acquisition?Cost of Customer Acquisition (CoCA)

is the total amount spent on acquiringa customer in the period that the

money was spent(from introduction or re-introduction to

sale).Also called Customer Acquisition Cost (CAC)

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Cost of Customer Acquisition

How To Caclulate CoCA

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Cost of Customer Acquisition

Formula:MkB = Marketing BudgetMS = Marketing Salary MB = Media BudgetCA = Customers Acquired

(sold)

CoCA =

2

MkB + MS + MB CA

Formula:MkB = $ 50,000MS = $ 50,000MB = $ 75,000 CA = 165 sold

=

Cost of Customer Acquisition2

$175,000165

$1,060 CoCAaverage

Cost of Customer Acquisition

Example:You spend $100 for a table at a trade

show,$400 advertising your presence at the trade show, soft costs of $200 (labor, materials) and you track one sold deal

out of the effort.

Your CoCA is $700 / 1 = $700 per sale

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Cost of Customer Acquisition

Example:You spend $100 for a table at a trade

show,$400 advertising your presence at the trade show, soft costs of $200 (labor, materials) and you track 10 leads out

of the effort.

Your CoCA is$700 / 10 = $70 per lead

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Cost of Customer Acquisition

Formula:Use a formula that works for your

needs. You may include expenses such as:

•sales wages / commission•sales vehicle fleet

•computer equipment•software•other overhead

Just be absolutely consistent.

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Cost of Customer Acquisition

Job Estimating and CoCA

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Cost of Customer Acquisition

Job Estimating and CoCAYou can choose to add your average CoCA of

$1,060 to every job, or…

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Cost of Customer Acquisition

Job Estimating and CoCAYou can choose to add your average CoCA of

$1,060 to every job, or…

Find your average CoCA per watt, rather than per job. Example:

$175,000 marketing budget / year1 MW, or 1,000,000 watts installed

/ year = $0.175 per watt

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Cost of Customer Acquisition

Job Estimating and CoCAYou can choose to add your average CoCA of

$1,060 to every job, or…

Find your average CoCA per watt, rather than per job. Example:

$175,000 marketing budget / year1 MW, or 1,000,000 watts installed

/ year = $0.175 per watt

Thus, a CoCA for a 4kW job would be estimated at

$0.175 x 4,000 watts = $704

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Cost of Customer Acquisition

What is the industry CoCA?

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Cost of Customer Acquisition

Vivent Solar CoCA per watt:2012 – $0.65, or 15% of total installed cost per

watt of $4.252013 – $0.57, or 16% of total installed cost per

watt of $3.552014 – $0.41, or 13% of total installed cost per

watt of $3.122015 – $0.45, or 15% of total installed cost per

watt 0f $2.96

SolarCity CoCA per watt:2012 – $0.49, or 10% of total installed cost per

watt of $4.732013 – $0.45, or 12% of total installed cost per

watt of $3.682014 – $0.50, or 17% of total installed cost per

watt of $2.952015 – $0.57, or 20% of total installed cost per

watt 0f $2.86

Source: greentechmedia.com, Lowering Customer Acquisition Costs, Mar. 23, 2016

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Cost of Customer Acquisition

Vivent Solar CoCA per watt:2012 – $0.65, or 15% of total installed cost per

watt of $4.252013 – $0.57, or 16% of total installed cost per

watt of $3.552014 – $0.41, or 13% of total installed cost per

watt of $3.122015 – $0.45, or 15% of total installed cost per

watt 0f $2.96

SolarCity CoCA per watt:2012 – $0.49, or 10% of total installed cost per

watt of $4.732013 – $0.45, or 12% of total installed cost per

watt of $3.682014 – $0.50, or 17% of total installed cost per

watt of $2.952015 – $0.57, or 20% of total installed cost per

watt 0f $2.86

Source: greentechmedia.com, Lowering Customer Acquisition Costs, Mar. 23, 2016

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We don’t know their metrics, so we can’t compare to our exmple. But…

Cost of Customer Acquisition

Vivent Solar CoCA per watt:2012 – $0.65, or 15% of total installed cost per

watt of $4.252013 – $0.57, or 16% of total installed cost per

watt of $3.552014 – $0.41, or 13% of total installed cost per

watt of $3.122015 – $0.45, or 15% of total installed cost per

watt 0f $2.96

SolarCity CoCA per watt:2012 – $0.49, or 10% of total installed cost per

watt of $4.732013 – $0.45, or 12% of total installed cost per

watt of $3.682014 – $0.50, or 17% of total installed cost per

watt of $2.952015 – $0.57, or 20% of total installed cost per

watt 0f $2.86

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…CoCA increased for both companies in 2015, regardless of their CoCA formula.

Cost of Customer Acquisition

Budgets and CoCA

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Cost of Customer Acquisition

Budgets and CoCAIf your goal is to increase your customer base

by 20% (or 35 new customers), what is an appropriate increase in marketing budget to achieve this goal?

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Cost of Customer Acquisition

Budgets and CoCAIf your goal is to increase your customer base

by 20% (or 35 new customers), what is an appropriate increase in marketing budget to achieve this goal?

35 new customers x $1,060 CoCA per customer= $37,500

I should add $37,500 to the budget.This is a starting point.

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Cost of Customer Acquisition

Spending and CoCA

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Cost of Customer Acquisition

Spending and CoCA

How do you know if a specific marketing effort is worth the cost? Apply CoCA by marketing channel to

determine value.

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Is this media opportunity a good

deal?

Cost of Customer Acquisition

Spending and CoCAA Google adwords campaign - spending $1,000/mo

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Cost of Customer Acquisition

Spending and CoCAA Google adwords campaign - spending $1,000/mo

ESTIMATE (before making a decision to spend)• 80,000 impressions w/ 0.5%

conversion• 400 clicks w/ 10%

conversion• 40 calls w/ 25% conversion• 10 appointments w/ 25% conversion• 2 sales = $ 500 CoCA per

sale

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Cost of Customer Acquisition

Spending and CoCAA Google adwords campaign - spending $1,000/mo

ACTUAL (post campaign results)• 88,000 impressions w/ 0.75%

conversion • 660 clicks w/ 10% conversion

• 66 calls w/ 29% conversion• 19 appointments w/ 25% conversion• 5 sales = $ 200 CoCA per

sale

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Cost of Customer Acquisition

Spending and CoCAA Google adwords campaign - spending $1,000/mo

Applying CoCA to other adwords metricsCoCA = $ 0.01 per impressionCoCA = $ 3.03 per clickCoCA = $ 12.20 per callCoCA = $ 50.00 per appointmentCoCA = $ 200.00 per sale

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Cost of Customer Acquisition

Spending and CoCADirect Mail campaign - spending $ 15,000

ESTIMATE (before making a decision to spend)• 10,000 homes w/ 0.o15%

conversion• 150 calls w/ 50%

conversion• 75 appointments w/ 25% conversion• 19 sales = $ 790 CoCA

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Cost of Customer Acquisition

Spending and CoCADirect Mail campaign - spending $ 15,000

ACTUAL (post campaign results)• 10,000 homes w/ 0.o1%

conversion• 100 calls w/ 50%

conversion• 50 appointments w/ 28% conversion• 14 sales = $ 1,071 CoCA

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Cost of Customer Acquisition

Spending and CoCADirect Mail campaign - spending $ 15,000

Applying CoCA to other Direct Mail metrics

CoCa = $ o.50 per impressionCoCA = $ 1.50 per homeCoCA = $ 150.00 per callCoCA = $ 300.00 per appointmentCoCA = $ 1,071 per sale

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Cost of Customer Acquisition

Spending and CoCANewspaper campaign - spending $18,000 – one month

ESTIMATED response rate from newspaper:

• circulation: 70,000• frequency: 2x/week• readership: 10% of circulation, or

7,000• response rate: 2%, 140 calls @ 25%

conversion rate•35 appointments @ 25%

conversion rate•9 sales, CoCA of $2,000

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Cost of Customer Acquisition

Spending and CoCANewspaper campaign - spending $18,000 – one month

ACTUAL (post campaign results)• 56,000 impressions w/ 0.0025%

conversion • 140 calls w/ 29% conversion

• 40 appointments w/ 26% conversion• 10 sales = $ 1,800 CoCA

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Cost of Customer Acquisition

Spending and CoCAYour data offers many insightsAdwords $ 500 CoCA $ 50 per appointment 10 salesDirect Mail $1,071 CoCA $300 per appointment 14 salesNewspaper $1,800 CoCA $450 per appointment 19 sales

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Cost of Customer Acquisition

Cost Tracking and CoCA

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Cost of Customer Acquisition

Cost Tracking and CoCASome efforts convert better than others,

leading to a lower CoCA.

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Cost of Customer Acquisition

Cost Tracking and CoCA

Newspaper A costs $18,000 and yields 36 sales.

Newspaper B costs $20,000 and yields 30 sales.

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Cost of Customer Acquisition

Cost Tracking and CoCA

Newspaper A costs $18,000 and yields 36 sales.

$18,000 / 36 sales = $500 CoCA

Newspaper B costs $20,000 and yields 30 sales.

$20,000 / 30 sales = $667 CoCA

It looks like newspaper A is a better value.

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Cost Tracking and CoCA

Newspaper A costs $18,000 and yields 36 sales.

$18,000 / 36 sales = $500 CoCA

Newspaper B costs $20,000 and yields 30 sales.

$20,000 / 30 sales = $667 CoCA

It looks like newspaper A is a better value.

Cost of Customer Acquisition7

Cost of Customer Acquisition

Cost Tracking and CoCA

Newspaper A costs $18,000 and yields 36 sales.

$18,000 / 36 sales = $500 CoCA

Newspaper B costs $20,000 and yields 30 sales.

$20,000 / 30 sales = $667 CoCA

It looks like newspaper A is a better value.

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BUT WAIT!!!

Cost of Customer Acquisition

Cost Tracking and CoCA

Sales increase does not automatically meanan increase in profit.

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Cost of Customer Acquisition

Cost Tracking and CoCA

Newspaper A yields SMALLER average system sizes of 4kW.

36 jobs x 4kW = 144 total kW installed (144,000w)

$18k spending / 144,000W = $ 0.125/watt CoCA

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Cost of Customer Acquisition

Cost Tracking and CoCA

Newspaper B yields LARGER average system

size of 10kW.

30 jobs x 10kW = 300 total kW installed (300,000w)

$20k spending / 300,000W = $ .066/watt CoCA

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Cost of Customer Acquisition

CLTV and CoCA

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Cost of Customer Acquisition

CLTV and CoCAKnow your Customer Lifetime value

(net profit from a customer over their lifetime).

With CoCA data, you can gauge your CoCA health bycomparing to the CLTV.

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Cost of Customer Acquisition8

For every $1 spent on a customer, you should earn $3.

Cost of Customer Acquisition8

Calculating LTV

CoCA = $ 1,060CLTV ≥ $ 3,180

3:1 ratio of CLTV to CoCA =

Cost of Customer Acquisition

The Aha! Moment

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Cost of Customer Acquisition

The Aha! Moment Team Leader

“Hey team, every phone call costs us $100.Every appointment, we spend $265.

Every sold job costs us $1,300.”

Team“Wow, we had no idea. Maybe we should answer the phones faster and not inconvenience the customer

by reschedule appointments.”

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Cost of Customer Acquisition

An Amicus Solar Cooperative Presentation

Frank ScottiSolarponics, Inc, Atascadero, California

January 12, 2017www.linkedin.com/in/frankscotti

frank@solarponics.com