Which metric best measures the efficiency of turning marketing spend into new customers?

• A. Customer Lifetime Value
• B. Revenue per Customer
• C. Customer Acquisition Cost
• D. Net Promoter Score

Answer: (C)

Measuring how efficiently marketing dollars turn into new customers comes down to cost to acquire a customer. This metric captures how much you spend to gain each new customer by dividing total marketing and sales spend by the number of new customers acquired in a given period. It’s the best choice because it directly ties the spend to the outcome you care about—how many new customers you’re generating—and lets you compare different channels, campaigns, or timeframes on the same basis to optimize where you invest.

Other metrics look at different aspects of the business and don’t focus on acquisition efficiency: lifetime value shows how much revenue a customer will generate over their entire relationship, not how much you spent to get them; revenue per customer measures how much revenue each customer brings in but ignores the cost of acquiring them; and Net Promoter Score gauges customer satisfaction and likelihood to recommend, which relates to advocacy rather than acquisition cost.

So for evaluating how efficiently your marketing spend converts into new customers, the cost to acquire a customer is the most direct and useful measure.