What is CAC & why does it matter to my mortgage business?

As a mortgage broker, it's essential to continuously assess and evaluate the effectiveness of your business strategy. One of the most important metrics to consider is the cost of acquisition or the amount of money it takes to acquire a new customer- AKA CAC

The cost of acquisition is crucial for scaling a mortgage brokerage business online because it allows you to calculate the return on investment (ROI) of your marketing efforts. By understanding how much it costs to acquire a customer, you can determine how much you can afford to spend on marketing and still turn a profit.

For example, if your CAC (cost of acquiring a customer ) is $1000, and the average mortgage you close is $250,000, you'll need to close one loan to earn a 250% return on your investment (assuming you earn 1 point). This can help you set realistic goals and allocate your marketing budget effectively.

In addition to helping you determine the ROI of your marketing efforts, the cost of acquisition can also provide valuable insights into the efficiency of your business processes. For example, if your cost of acquisition is high, it may be a sign that you're not maximizing your lead conversion rate or that your business processes are inefficient. By identifying and addressing these issues, you can lower your cost of acquisition and increase your profitability.

To effectively track your cost of acquisition, it's important to have a system in place to measure and track all of your marketing efforts accurately. This can include using tools like Google Analytics to track website traffic and conversions, or using a customer relationship management (CRM) system to track leads and customer interactions.

In conclusion, the cost of acquisition is a crucial metric for mortgage brokers looking to scale their business online. By understanding the cost of acquiring a new customer, you can effectively allocate your marketing budget, set realistic goals, and identify areas for improvement in your business processes. By tracking and analyzing this metric, you can optimize your marketing efforts and increase the profitability of your mortgage brokerage.