Disciplined Entrepreneurship, 2nd Edition

STEP 19Calculate the Cost of Customer Acquisition (CoCA)

In This Step, You Will:

• Estimate how much it costs to acquire a customer over the short term, medium term, and long term, based on the go‐to‐market (GTM) plan you developed in Step 18.
• Understand the key drivers of these costs and how to influence them over time.

Entrepreneurs consistently underestimate the real costs of customer acquisition. It is essential that you do realistic calculations.

Why This Step, and Why Now?

The unit economics are a simple but effective indicator for how sustainable and attractive your business will be at any point in time, especially as it scales. You just completed a thoughtful first‐draft go‐to‐market (GTM) plan in Step 18, and now with this critical information it is time to estimate your CoCA. The balance between LTV and CoCA is one of the most generally accepted metrics to decide if you have a viable business, so these calculations should be done before you start to make the heavy investment in product development.

Let's Get Started

Now that you have done a first‐pass estimate on LTV, the question becomes: “How much will it cost to successfully acquire that average new additional customer?”

The concept of CoCA is relatively simple, but when they first start, entrepreneurs ...