Customer Acquisition & Retention Rates

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Multiple Choice

A department store has 2,000 new customers one month. They spent $5,000 on marketing and had $7,000 in sales costs.

What is the customer acquisition cost?

(Marketing Expenses + Sales Expenses)/# New Customers

• $10

• $8

• $6

• $4

Multiple Choice

Was the marketing effective?

• Yes

• No

Was the marketing effective?

YES!


When customer acquisition costs are low, marketing is effective.

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Multiple Choice

Local pizza place has 50 new customers this month. They spent $2,000 on marketing and $3,000 in sales costs.

(Marketing Expenses + Sales Expenses)/# New Customers

What is the customer acquisition cost?

• $200

• $100

• $20

• $10

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Multiple Choice

Was the marketing effective?

• Yes

• No

Was the marketing effective?

NO!


When customer acquisition costs are high, marketing is less effective.

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Multiple Choice

A coffee shop starts a quarter with 500 customers. They finish the quarter with 550 customers. They had 75 new customers.

(End customers – New Customers) / Starting customers

What is the customer retention rate?

• 95%

• 90%

• 9%

• 9.5%

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Multiple Choice

A donut shop has 200 customers at the start of the November. They have 25 new customers visit that month. The shop has 210 customers at the end of the month.

(End customers – New Customers) / Starting customers

What is the customer retention rate?

• 90%

• 92%

• 92.5%

• 925%