Foundations of Sales and Customer Acquisition

Introduction

Entrepreneurship depends not only on creating value but also on transferring that value to customers in a sustainable way. A technically excellent product can fail if the venture cannot identify appropriate customers, communicate its benefits, earn trust, complete transactions, and retain users. Sales and customer acquisition therefore form a central entrepreneurial capability rather than a narrow business function.

Sales is the process through which an organization helps a prospective customer recognize a problem, evaluate alternatives, make a purchase decision, and begin a relationship with the organization. Customer acquisition is broader: it includes the activities and costs involved in attracting and converting new customers. Sales may be one component of acquisition, alongside advertising, search, partnerships, content, referrals, product-led growth, and community building.

For an entrepreneur, the central question is not simply, “How do we sell this product?” It is, “For whom does this product create meaningful value, how can we reach those people efficiently, and how can we build a relationship whose economics and ethics are sustainable?”

Learning Objectives

By the end of this chapter, you should be able to:

1. Explain why sales is strategically important to entrepreneurial ventures.
2. Distinguish sales, marketing, business development, acquisition, retention, and customer success.
3. Describe common sales processes, funnel models, and routes to market.
4. Calculate and interpret basic conversion, acquisition-cost, lifetime-value, and unit-economics measures.
5. Evaluate acquisition decisions using financial, ethical, customer-centered, and regulatory criteria.
6. Apply these concepts to a realistic entrepreneurial case.

1. Sales as an Entrepreneurial Function

Entrepreneurs often begin with a product idea, a technological capability, or a perceived market gap. However, value is realized only when a customer adopts the offering and receives a benefit greater than the sacrifice required to obtain it. The sacrifice may include money, time, learning effort, switching costs, privacy, operational disruption, or perceived risk.

Sales performs four important entrepreneurial roles.

Market learning

Early selling conversations provide evidence about customer problems, willingness to pay, alternatives, objections, and buying processes. This evidence can be more useful than assumptions made inside the venture. A founder who repeatedly hears that customers value reliability more than additional features has obtained information relevant to product design and positioning.

Value communication

Customers do not purchase features in isolation. They purchase expected outcomes. Sales translates technical or operational characteristics into customer-relevant value. For example, “automated invoice reconciliation” may be communicated as “fewer hours spent correcting payment records and faster month-end closing.”

Resource generation

Revenue finances experimentation, wages, inventory, service delivery, and future growth. For many ventures, sales also provides evidence of product–market fit to investors, employees, partners, and other stakeholders.

Relationship formation

In complex or recurring businesses, the initial transaction is the beginning rather than the end of the commercial relationship. Sales establishes expectations that must later be fulfilled by onboarding, service, support, and customer-success teams.

Sales should not be confused with persuasion at any cost. Professional selling is a value-creation and value-exchange activity. It should involve accurate claims, informed customer choice, appropriate qualification, and a willingness to reject unsuitable transactions.

2. Distinguishing Related Business Functions

The terms used in commercial organizations overlap, but they describe different primary purposes.

Marketing and sales

Marketing generally works on market understanding, demand creation, and the meaning attached to an offering. Sales generally works on progressing an identified opportunity toward a transaction. In practice, the boundary varies. A small founder-led venture may perform both functions, while a large firm may have separate departments and systems.

Marketing can generate attention without producing qualified demand; sales can close deals without creating sustainable market understanding. Effective ventures coordinate the two through shared definitions, feedback, and performance measures.

Sales and business development

Business development usually concerns longer-horizon opportunities that alter how a venture reaches or serves a market. A sales representative may sell software directly to a restaurant chain. A business-development manager may negotiate a partnership with a national hospitality platform through which thousands of restaurants can access the software. The distinction is functional, not absolute: partnership opportunities may eventually require sales execution.

Acquisition and retention

Acquisition concerns obtaining a new customer. Retention concerns maintaining the relationship after acquisition. A venture can grow through acquisition while losing customers rapidly, but this is often economically and operationally unstable. Retention also affects reputation, referrals, forecasting, and the cost of future growth.

Customer success and customer service

Customer service commonly responds to specific questions or problems. Customer success is more proactive and outcome-oriented. A support agent may resolve a login problem; a customer-success manager may help a client integrate a platform into its workflow so that the client achieves measurable productivity gains.

3. Markets, Customers, and Value Propositions

A sales process begins before a salesperson contacts anyone. The venture must identify a customer segment: a group whose members share relevant characteristics, needs, behaviors, or buying conditions. Segmentation may use demographic, geographic, firmographic, behavioral, psychographic, or needs-based variables.

A useful segment is not merely large. It should be sufficiently identifiable, reachable, responsive to the offering, and economically attractive. Entrepreneurs should distinguish:

• User: the person who uses the product.
• Buyer: the person or organization that makes the purchase.
• Decision maker: the individual with authority to approve the purchase.
• Influencer: someone who affects the decision without final authority.
• Economic buyer: the person who evaluates financial consequences and budget ownership.
• Beneficiary: the person who receives the principal benefit.

These roles may be performed by one person or distributed across a buying group. In business-to-business markets, confusing the enthusiastic user with the economic buyer is a common cause of failed sales efforts.

A value proposition explains why a chosen customer should prefer the offering to relevant alternatives. It should identify the customer problem, the proposed solution, the principal benefit, and the basis for believing the claim. A strong value proposition is specific enough to guide targeting and selling but not so narrow that it describes only a feature.

For example, “AI-powered scheduling” is a feature-oriented statement. “Reduce appointment gaps for independent clinics without adding administrative staff” communicates a customer problem and an expected outcome. The claim must still be supported by evidence and presented with appropriate qualifications.

4. Sales Processes and Routes to Market

A sales process is a sequence of activities that moves a potential customer from initial awareness or identification toward purchase and post-purchase adoption. A typical consultative process includes:

1. Prospecting: identifying organizations or individuals who may fit the target profile.
2. Qualification: assessing need, fit, authority, timing, resources, and willingness to act.
3. Discovery: investigating the customer’s situation, goals, constraints, and current alternatives.
4. Value demonstration: showing how the offering addresses relevant problems.
5. Proposal: specifying scope, price, terms, responsibilities, and expected outcomes.
6. Negotiation: resolving legitimate differences concerning value, risk, timing, and conditions.
7. Closing: obtaining a clear decision and completing the transaction.
8. Onboarding and handoff: enabling initial use and transferring necessary information to delivery or success teams.
9. Expansion or renewal: developing continued value where appropriate.

This sequence is not mechanically linear. Prospects may return to discovery, pause, involve new decision makers, or exit. A process is useful because it makes work visible and repeatable, not because every buyer behaves identically.

Routes to market

A venture may reach customers through several routes:

• Direct sales: the venture sells through its own employees or founders.
• Self-service or product-led acquisition: customers discover, trial, and purchase with limited human intervention.
• Retail or physical distribution: intermediaries or locations provide access to end customers.
• Channel partners: distributors, resellers, agents, or implementation partners sell or deliver the offering.
• Marketplaces: a platform connects buyers and sellers, often in exchange for fees or control over customer access.
• Strategic partnerships: another organization provides access, credibility, data, infrastructure, or complementary value.

The appropriate route depends on transaction complexity, customer risk, required education, geography, margins, speed, and the venture’s capabilities. High-touch sales may be appropriate for expensive enterprise systems, whereas self-service distribution may suit a low-cost digital product with limited perceived risk.

5. The Funnel and Customer Journey

A funnel model represents the declining number of people who progress through stages such as awareness, engagement, qualified opportunity, purchase, adoption, and retention. It is called a funnel because organizations often begin with a larger population and observe fewer entities at later stages.

The funnel is useful for identifying bottlenecks, but it is not a complete theory of customer behavior. Customers may enter through referrals, compare alternatives outside the venture’s measurement system, repeat stages, or influence one another. A journey model complements the funnel by emphasizing experience, touchpoints, emotions, and post-purchase outcomes.

A simple quantitative funnel can be represented as follows:

Here, N_i is the number entering stage i, c_i is the conversion rate from stage i to stage i+1, and N_i+1 is the number reaching the next stage. The conversion rate is expressed as a proportion between 0 and 1. This relationship assumes that the stages and counting period are clearly defined and that the same unit—people, accounts, or opportunities—is used consistently.

For a sequential funnel, the overall conversion rate is:

where each C_j is the conversion rate for one stage transition and k is the number of transitions. This multiplication is appropriate when progression through all stages is sequential and the rates refer to compatible cohorts.

Worked example: funnel conversion

Suppose a venture identifies 2,000 prospective accounts. Of these, 20% respond to outreach, 30% of responders accept a discovery meeting, 50% of meetings become proposals, and 40% of proposals close.

• Responders: 2,000 × 0.20 = 400
• Discovery meetings: 400 × 0.30 = 120
• Proposals: 120 × 0.50 = 60
• Customers: 60 × 0.40 = 24

The overall prospect-to-customer conversion rate is 24 ÷ 2,000 = 0.012, or 1.2%. Improving any stage can increase customers, but improving a stage with a severe bottleneck may have the greatest practical effect. The venture should also verify that “prospect,” “response,” “meeting,” and “close” are defined consistently and are not inflated by duplicate records.

6. Essential Unit Economics

Unit economics examine the revenue and directly attributable costs associated with one customer, order, subscription, or other meaningful unit. They do not replace full financial statements, because they may exclude overhead, financing, taxes, and shared costs. They are nevertheless valuable for testing whether growth is economically plausible.

Customer acquisition cost

Customer acquisition cost (CAC) is commonly calculated as:

where S is sales expenditure during a defined period, M is marketing expenditure during that period, and N_new is the number of new customers attributable to those activities. Costs and customers must refer to the same period or to a carefully justified attribution window. The measure may be distorted if sales expenses support renewals, if acquisition occurs after a long delay, or if overhead is inconsistently included.

Average revenue and contribution margin

Average revenue per customer (ARPC) over a period is:

where R is revenue from the relevant customer group and N is the number of customers in that group. Revenue is not the same as profit. Contribution margin focuses on revenue remaining after variable costs:

where VC represents variable costs associated with producing and serving the relevant units. The contribution-margin ratio is:

These measures require consistent treatment of refunds, discounts, payment fees, usage costs, commissions, and other variable items.

Customer lifetime value

A simplified recurring-revenue estimate of customer lifetime value (LTV) is:

where m is average contribution margin per customer per period, g is the retention rate per period, r is the discount rate per period, and d is the rate of margin decline or contraction per period, when applicable. This formula assumes a stable margin, constant rates, a recurring relationship, and a sufficiently long horizon. It is inappropriate when retention, pricing, or margins change substantially over time without adjustment.

A simpler approximation sometimes used when discounting is ignored is:

where T is expected customer lifetime measured in periods. For a constant-period churn rate h, a rough expected lifetime is sometimes approximated as 1 ÷ h, provided churn is defined consistently and the approximation is understood as a model rather than a guarantee.

Worked example: acquisition economics

Assume a subscription venture spends $18,000 on sales and marketing in one quarter and acquires 120 new customers. Its CAC is:

$18,000 ÷ 120 = $150 per customer.

Each customer pays $80 per month. Variable service and payment costs equal $30 per month, so monthly contribution margin is $50. If monthly retention is 95%, monthly discounting is ignored for a rough estimate, and the venture uses the constant-retention approximation, expected lifetime is:

1 ÷ (1 − 0.95) = 20 months.

Estimated LTV is therefore:

$50 × 20 = $1,000.

The rough LTV-to-CAC ratio is $1,000 ÷ $150 = 6.67. This result is not proof that the business is healthy. The venture must consider onboarding costs, fixed costs, delayed cash collection, expansion revenue, service capacity, attribution errors, and whether the observed retention rate will persist as the venture scales.

A more conservative decision may use contribution payback period:

With the example values, payback is $150 ÷ $50 = 3 months. This indicates how long contribution margin takes to recover acquisition cost, assuming the margin estimate is accurate and cash timing is not materially different.

7. Measurement and Decision-Making

Useful commercial measurement begins with clear definitions. Common metrics include:

• Lead-to-customer conversion: customers divided by defined leads.
• Win rate: won opportunities divided by eligible closed opportunities.
• Average sales cycle: elapsed time from a defined starting event to close.
• Pipeline value: the value of open opportunities, which is not equivalent to expected revenue.
• Churn: the proportion of customers or recurring revenue lost during a defined period.
• Retention: the proportion remaining after a defined period.
• Expansion: additional revenue or usage from existing customers.
• Activation: completion of a behavior associated with meaningful initial value.

A metric should have a unit, time period, population, inclusion rule, and data source. For example, “conversion improved” is incomplete unless the organization identifies conversion from what stage to what stage, for which cohort, over what period.

Entrepreneurs should distinguish leading indicators from lagging indicators. Website visits, qualified meetings, product activation, and proposal acceptance may signal future revenue. Revenue, gross margin, renewal, and cash collection are lagging outcomes. Leading indicators are useful only when historically connected to outcomes; otherwise, they can become vanity metrics.

Experimentation can improve acquisition and conversion. A controlled test may compare two messages, landing pages, prices, or onboarding sequences. The venture should define the primary outcome before the test, avoid changing multiple relevant variables without a plan, use an appropriate comparison group, and consider practical as well as statistical significance. Small samples and repeated testing can produce unstable conclusions.

8. Ethical, Legal, and Governance Considerations

Sales and acquisition involve power, information, and personal data. Ethical practice is therefore a core professional requirement.

Important principles include:

• Truthfulness: claims should be accurate, supportable, and not misleading through omission or exaggeration.
• Informed choice: customers should understand material prices, restrictions, risks, renewal terms, and cancellation conditions.
• Privacy: personal data should be collected for legitimate purposes, minimized, secured, and handled according to applicable law.
• Consent and communication control: commercial messages should respect consent requirements, opt-out mechanisms, and channel-specific rules.
• Fairness: targeting, pricing, scoring, and service decisions should be examined for discriminatory effects.
• Transparency in incentives: commissions should not encourage unsuitable sales, concealment, or exploitation of vulnerable customers.
• Responsible AI: automated lead scoring, personalization, chatbots, and recommendations require oversight, testing, explainability appropriate to the context, and human escalation for consequential decisions.

Regulatory requirements vary by jurisdiction and industry. Financial services, health care, education, telecommunications, children’s products, and other regulated areas may impose additional duties. Entrepreneurs should seek qualified legal advice rather than treating a general sales framework as legal compliance.

9. Technology, AI, and Contemporary Practice

Customer-relationship-management systems organize contacts, opportunities, activities, forecasts, and service histories. When properly governed, they improve coordination and make performance visible. Poor data entry, duplicate records, unclear ownership, and excessive automation can instead create false confidence.

Digital acquisition has expanded through search, social platforms, creator partnerships, communities, webinars, marketplaces, and product-led growth. These channels can reduce friction but may increase dependence on platform algorithms, auction-based advertising costs, and third-party data practices.

AI can assist with account research, conversation summarization, lead prioritization, draft communications, forecasting, and service triage. It should support—not replace—professional judgment. Entrepreneurs should check generated claims, protect confidential information, monitor bias, disclose automation where appropriate, and preserve a human route for complaints or high-impact decisions.

Contemporary selling is also increasingly omnichannel. Customers may discover a product through a search engine, ask questions in a community, compare alternatives on a marketplace, speak with a salesperson, and complete a purchase through a mobile application. The venture should seek a coherent customer experience rather than optimizing each channel in isolation.

10. Illustrative Case: GreenCart Office Supplies

Background

GreenCart is a fictional early-stage venture offering subscription-based office supplies to small professional firms. Its promise is to reduce stockouts and administrative effort through scheduled replenishment and usage-based recommendations. The founders initially target all small businesses.

Problem

After three months, GreenCart has many website visitors but few paying customers. The founders report that sales conversations are inconsistent. Some prospects are attracted by sustainability claims, others by convenience, and others by lower prices. Customers who do subscribe often cancel after two months because the recommended quantities do not match their changing needs.

Analysis

The venture has confused a broad market label with a well-defined segment. It also treats visits as evidence of demand without examining activation, purchase conversion, or retention. Interviews reveal that small architecture and design studios experience frequent urgent printing and packaging needs, while many other small firms do not. In these studios, an office manager often uses the system, but a partner approves expenditure.

The founders map the journey: targeted introduction, online assessment, sample supply box, trial subscription, first replenishment, and renewal. They discover that the online assessment asks for too much information and does not clearly explain how customers can modify recommendations. They also find that sales representatives promise “zero waste,” a claim that cannot be substantiated.

Approach and solution

GreenCart narrows its initial segment to design studios with five to thirty employees and a demonstrated monthly purchasing pattern. Marketing develops a message focused on avoiding urgent supply runs and improving inventory visibility, with sustainability presented as a measured secondary benefit rather than an absolute claim.

Sales adopts a qualification guide that identifies the user, budget owner, current purchasing process, frequency of stockouts, and decision timeline. The product team simplifies the assessment and adds customer controls. Customer success contacts new subscribers before the first replenishment to verify quantities and records the customer’s preferred adjustment process.

The founders measure the funnel by cohort. They separately track qualified assessments, trials, first replenishments, and second-month renewals. They include sales and marketing costs in CAC and variable fulfillment costs in contribution margin. Rather than judging success by traffic, they set a decision rule based on second-month retention and contribution payback.

Outcome

In this illustrative case, the narrower segment produces fewer visitors but a higher proportion of qualified trials. Clearer expectations reduce unsuitable subscriptions, while proactive adjustment improves early retention. The venture does not claim that every customer will remain indefinitely; instead, it learns which segment, message, process, and service design produce sustainable economics.

Learning points

1. Broad awareness is not the same as qualified demand.
2. The user, buyer, and economic decision maker may differ.
3. Acquisition and retention must be analyzed together.
4. Product design and customer success influence sales economics.
5. Ethical claims are part of the value proposition, not an optional communication detail.
6. Metrics become useful only when definitions, cohorts, and time periods are explicit.

Challenges and Limitations of Sales Models

Funnel models can imply that customers move passively and linearly. In reality, buying is social, iterative, and affected by competitors, budgets, regulations, habits, and unexpected events. Conversion rates may also hide unequal outcomes across customer groups.

Unit economics can be misleading when costs are allocated inconsistently, retention is estimated from immature cohorts, or revenue is recognized before cash is collected. LTV is especially sensitive to assumptions. A high ratio of estimated LTV to CAC does not justify unlimited spending if the estimate depends on uncertain long-term behavior.

Attribution is another limitation. A customer may encounter many marketing and sales touchpoints, making it difficult to assign credit to one channel. Entrepreneurs should use multiple perspectives—such as first touch, last touch, assisted touch, cohort analysis, and incrementality testing—rather than treating a single attribution model as objective truth.

Finally, pressure for short-term growth can encourage aggressive discounting, unsuitable customers, hidden terms, or manipulative interface design. Sustainable acquisition balances commercial performance with customer welfare, employee conduct, legal obligations, and long-term trust.

Best Practices for Entrepreneurial Sales and Acquisition

1. Define the target segment and buying roles before scaling outreach.
2. Use customer conversations as structured market research, not merely as opportunities to pitch.
3. Translate features into measurable or observable customer outcomes.
4. Align marketing, sales, delivery, and customer-success definitions.
5. Record funnel stages with explicit entry and exit criteria.
6. Analyze cohorts rather than relying only on aggregate averages.
7. Include variable costs and realistic retention assumptions in unit economics.
8. Track cash timing and payback, not only projected lifetime value.
9. Test claims and remove unsupported promises.
10. Automate routine work while preserving human judgment and escalation.
11. Treat complaints, cancellations, and failed deals as learning evidence.
12. Design for long-term customer value rather than one-time extraction.

Chapter Summary

Sales is a central entrepreneurial process through which value is communicated, exchanged, and learned about. It supports market discovery, revenue generation, relationship formation, and business-model validation. Marketing creates understanding and demand; sales progresses qualified opportunities; business development develops strategic routes and relationships; acquisition obtains new customers; retention maintains relationships; and customer success helps customers achieve intended outcomes.

Customer segmentation, value propositions, buying roles, sales processes, routes to market, and funnel models provide a foundation for commercial action. Funnel calculations help identify stage bottlenecks, but customer journeys are more complex than a linear sequence. Unit economics connect acquisition spending with revenue, contribution margin, retention, lifetime value, and payback. These calculations are useful only when their assumptions, time periods, units, and attribution rules are explicit.

Effective acquisition is not simply a contest for attention. It must be accurate, fair, privacy-conscious, legally responsible, and connected to post-purchase value. Technology and AI can improve research, coordination, and service, but they require data governance, human oversight, and attention to bias and customer welfare. Sustainable entrepreneurial growth emerges when a venture can repeatedly acquire appropriate customers, help them succeed, retain their trust, and do so with sound economics.

Key Terms

Sales: The process of facilitating a value exchange with a prospective or existing customer.

Marketing: Activities that research markets, create demand, and shape an offering’s meaning and position.

Business development: The development of strategic relationships, channels, partnerships, and market opportunities.

Customer acquisition: The activities and costs involved in obtaining new customers.

Retention: The continuation of a customer relationship over time.

Customer success: Proactive work that helps customers achieve intended outcomes from an offering.

Customer segment: A group of customers sharing relevant needs, characteristics, or buying conditions.

Value proposition: A statement of the customer problem, solution, benefit, and supporting reason to believe.

User: The person who uses the product or service.

Buyer: The person or organization that makes the purchase.

Economic buyer: The actor who evaluates financial consequences and controls or influences budget approval.

Sales process: A structured sequence of activities that progresses a potential customer toward purchase and adoption.

Route to market: The method by which an offering reaches and is sold to customers.

Sales funnel: A staged representation of movement from potential demand to purchase and subsequent outcomes.

Conversion rate: The proportion moving from one defined stage to another.

Customer acquisition cost (CAC): Sales and marketing cost divided by attributable new customers.

Contribution margin: Revenue remaining after relevant variable costs.

Customer lifetime value (LTV): Estimated contribution value generated by a customer over the relationship.

Churn: The loss of customers or recurring revenue during a defined period.

Payback period: The time required for contribution margin to recover acquisition cost.

Review Questions

Short Answer Questions

1. Why is sales considered a source of market learning for an entrepreneur?
2. Distinguish customer service from customer success.
3. What is the difference between a user, a buyer, and an economic buyer?
4. Why should a funnel model be supplemented by a customer-journey perspective?
5. State two assumptions that can make an LTV estimate unreliable.

Long Answer Questions

1. Explain the differences and relationships among marketing, sales, business development, customer acquisition, retention, and customer success.
2. Describe a complete consultative sales process and explain why the process should not be treated as mechanically linear.
3. Discuss how segmentation and value propositions influence entrepreneurial sales performance.
4. Explain CAC, contribution margin, LTV, and payback period, including the limitations of each measure.
5. Evaluate the ethical and governance responsibilities involved in digital customer acquisition and AI-assisted selling.

Analytical / Application Questions

1. A venture has 5,000 prospects. Twenty-five percent respond, 40% accept a meeting, 50% receive a proposal, and 30% purchase. Calculate the number of customers and the overall prospect-to-customer conversion rate. Identify one stage at which improvement could be tested.
2. A subscription firm spends $24,000 on sales and marketing and acquires 160 customers. Each customer generates $70 monthly revenue and incurs $25 monthly variable cost. Monthly retention is 90%. Using the rough constant-retention approximation and ignoring discounting, calculate CAC, monthly contribution margin, estimated lifetime, and LTV. Explain at least two reasons why the result should not be treated as a forecast with certainty.
3. Design a sales and customer-success plan for a new business-to-business software venture in which the user, buyer, and economic buyer are different people. Specify the target segment, funnel stages, key metrics, handoff practices, and one ethical safeguard.

Multiple Choice Questions with Answers

Question 1

Which activity is most directly associated with customer success?

A. Creating broad market awareness through advertising

B. Helping customers achieve intended outcomes after purchase

C. Negotiating a strategic distribution alliance

D. Identifying a list of uncontacted prospects

Correct Answer: B. Helping customers achieve intended outcomes after purchase

Question 2

A venture has 1,000 prospects and a 10% response rate. How many prospects respond?

A. 10

B. 50

C. 100

D. 900

Correct Answer: C. 100

Question 3

Which statement best distinguishes acquisition from retention?

A. Acquisition obtains new customers, while retention maintains existing relationships

B. Acquisition concerns products, while retention concerns employees

C. Acquisition is always paid advertising, while retention is always personal selling

D. Acquisition measures profit, while retention measures revenue

Correct Answer: A. Acquisition obtains new customers, while retention maintains existing relationships

Question 4

A venture spends $12,000 on sales and marketing and gains 80 new customers. What is its CAC?

A. $15

B. $80

C. $120

D. $150

Correct Answer: D. $150

Question 5

Which person primarily evaluates the financial consequences and budget implications of a purchase?

A. The user

B. The influencer

C. The economic buyer

D. The service agent

Correct Answer: C. The economic buyer

Question 6

If 40% of qualified opportunities receive proposals and 25% of proposals close, what proportion of qualified opportunities becomes customers, assuming sequential stages?

A. 10%

B. 15%

C. 25%

D. 65%

Correct Answer: A. 10%

Question 7

Which is a limitation of a funnel model?

A. It cannot represent any numerical conversion rate

B. It may oversimplify non-linear and socially influenced buying behavior

C. It is useful only for physical retail businesses

D. It automatically includes customer retention

Correct Answer: B. It may oversimplify non-linear and socially influenced buying behavior

Question 8

Revenue of $100 and variable costs of $35 produce what contribution margin?

A. $35

B. $65

C. $100

D. $135

Correct Answer: B. $65

Question 9

Which practice is most consistent with ethical acquisition?

A. Hiding renewal terms until after payment

B. Using unsupported performance claims to increase response rates

C. Providing clear material terms and respecting privacy requirements

D. Targeting vulnerable customers with deliberately confusing pricing

Correct Answer: C. Providing clear material terms and respecting privacy requirements

Question 10

Why is payback period useful in acquisition analysis?

A. It estimates how long contribution margin takes to recover CAC

B. It proves that all acquired customers will remain permanently

C. It replaces the need to measure variable costs

D. It measures brand awareness without reference to money

Correct Answer: A. It estimates how long contribution margin takes to recover CAC