CAC in the sports industry
You have to spend money to make money. As much as we wish that this wasn’t always the case, it is an almost constant reality in any industry. This is why marketing teams and departments exist in the first place; to determine the best way to invest in attracting business. In the sports industry, the marketing department’s success can to a large extent be measured by the average number of fans that attend each game or by the number of season ticket holders in any given year. But it can be very useful to narrow this down and measure efficiency over a certain period, of a certain marketing channel, or from a specific marketing campaign. A useful metric to use here would be CAC or Customer Acquisition Cost.
An article on neilpatel.com breaks down how “CAC can be calculated by simply dividing all the costs spent on acquiring more customers (marketing expenses) by the number of customers acquired in the period the money was spent.” So say for example that you wanted to measure the efficiency of your marketing efforts directed at acquiring new season ticket holders for a specific season. You would take the total amount spent marketing toward that specific purpose and divide it by the number of new season tickets sold in the same period. That dollar amount would be the CAC for that specific campaign.
Note that CAC can only tell you so much in a vacuum. To truly use it to measure efficiency, it should be compared to the average customer lifetime value (LTV) brought in within the same campaign, channel, or period that you are measuring CAC for. It is not enough for the LTV to be higher than the CAC. You must determine what your target ratio of CAC to LTV should be for your team in the specific category you are addressing. If that ratio is not where you want it to be, your marketing efforts may need to be adjusted.
By helping to assess efficiency in marketing, CAC can help the team determine which campaigns are worth keeping, which ones should be scrapped, and which ones should be expanded upon, thus optimizing the profitability of each individual or season ticket sold.