Acquisition Efficiency Ratio (AER) is a financial metric that assesses the effectiveness of a company’s marketing and sales efforts in acquiring new customers. It relates the costs associated with customer acquisition to the generated revenue from those customers over a specified period. A low AER indicates that a company is efficiently converting its investment in customer acquisition into revenue, while a high AER suggests inefficiencies in attracting profitable customers.
In practice, the AER is calculated by dividing the total customer acquisition costs (CAC)—which may include marketing expenses, sales team costs, and promotional expenditures—by the net revenue attributed to new customers within the same time frame. This ratio is highly relevant for businesses aiming to optimize their marketing strategies and improve profitability. By monitoring changes in the AER, companies can identify trends and adjust their resources accordingly to enhance customer acquisition efficiency, ultimately driving growth and sustainability in their operations.
