How to Calculate Your Customer Acquisition Targets for Sustainable Growth
Are you flying blind with arbitrary customer acquisition goals that ignore your changing business reality? Discover the surprisingly simple calculation that reveals exactly how many new customers you need to maintain growth—and why that number might be significantly higher than you think. Learn the hidden metrics quietly draining your acquisition efforts and the two powerful levers you can pull to dramatically reduce the number of new customers you need to drive sustainable growth.RetryClaude can make mistakes. Please double-check responses.
One of the most critical questions for any ecommerce business is: How many new customers do we need to acquire to maintain or grow our revenue? Without a clear answer, you risk either underinvesting in acquisition (leading to revenue decline) or setting unrealistic targets that drain your marketing budget.
In this guide, we'll walk through a practical exercise to determine precisely how many new customers your business needs to acquire for sustainable growth.
Understanding Your Revenue Change Drivers
The first step is to analyze your historical sources of revenue change. Let's examine what drove revenue changes from 2023 to 2024 in our example:
Three Key Revenue Buckets
- Retained Customers: Customers active in both 2023 and 2024
- How much more or less did they spend year-over-year?
- New Customers: Customers acquired in 2024
- How much total revenue did they generate?
- Lost Customers: Customers from 2023 who didn't return in 2024
- How much revenue disappeared when these customers left?
This analysis reveals two crucial insights:
- How many new customers you need to maintain current revenue
- What levers you can pull to reduce acquisition burden or amplify growth
Calculating Your Acquisition Gap
In our example, we identified two sources of revenue loss that need to be compensated for:
- Lost Customers: Customers who didn't return from 2023 to 2024
- Reduced Spending: Retained customers who spent less in 2024 than in 2023
Together, these losses created a $1.4 million revenue gap that needs to be filled with new customer acquisitions.
Understanding the Customer Numbers
- Non-returning customers: 9,600
- Retained customers who spent less: 260
- Total customers to replace: 9,860
From these numbers, we can calculate that customers in 2023 spent an average of $146 per year. This is different from average order value (AOV) as it accounts for repeat purchases throughout the year.
Factoring in Current Customer Behavior
Next, we examine the most recent customer metrics from 2024:
- Average order value (AOV): $119
- Average order frequency: 1.07 orders per customer
- Average customer spend: $127 (AOV × frequency)
Notice that the average customer spend decreased from $146 in 2023 to $127 in 2024. This changing customer behavior is crucial to factor into your acquisition targets.
Determining Your Acquisition Target
With a $1.4 million revenue gap and an average customer spend of $127, we can calculate:
Required new customers = Revenue gap ÷ Average customer spend
$1,400,000 ÷ $127 = 11,400 new customers needed
This is significantly higher than the 9,860 customers we lost, highlighting an important insight: When your average customer value decreases, you need to acquire more customers to maintain the same revenue.
Key Takeaways from Our Analysis
- Use recent averages: Always calculate targets using your most recent customer behavior data. Using outdated metrics can lead to significant underestimates.
- Identify the underlying drivers: In this case, the decrease in customer spend was driven primarily by lower average order value rather than purchase frequency, suggesting a pricing or product mix issue.
- Monitor metrics constantly: These numbers will shift throughout the year, changing your acquisition targets accordingly.
- Know your levers: If acquiring 11,400 new customers seems daunting, you have two alternatives:
- Increase average order value: Through upselling, cross-selling, or pricing strategies
- Improve purchase frequency: Through retention marketing, loyalty programs, or subscription models
Putting This Into Practice
This methodology provides a data-driven approach to setting realistic acquisition targets. Rather than arbitrary growth goals, you now have a concrete number based on your business's specific performance and customer behavior.
For Shopify merchants, we've developed a free dashboard that automatically calculates these metrics for you. The application is completely free to install and use, making it easy to stay on top of your acquisition targets throughout the year.
If you need help tracking any of the metrics discussed in this post or would like to learn more about optimizing your customer acquisition strategy, feel free to reach out to our team at Holscher Analytics.
By understanding exactly how many new customers you need—and why—you can allocate your marketing budget more effectively and build a sustainable growth strategy that accounts for changing customer behavior.
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