As a business owner, it's important to know the numbers that drive your success.
Two of the most important numbers to measure in your business are customer acquisition cost (CAC) and customer lifetime value (CLTV).
CAC is obvious. It is the cost of acquiring a new customer.
But CLTV is one of the most overlooked numbers in business.
It is the amount of revenue or profit that a customer is expected to generate for a business over the course of their relationship.
CAC and CLTV are important metrics for businesses to track because it helps them to understand the long-term value of their customers and make more informed decisions about how much to invest in acquiring new customers versus retaining existing ones.
Let me give you an example to illustrate their importance.
Imagine you own a small e-commerce business selling handmade jewelry.
At a certain time, you were primarily focused on growing your social media presence and getting your products in front of as many people as possible.
But as you started to track your numbers more closely, you realized that your CAC was actually quite high.
You were spending a lot of money on ads and influencer partnerships, but not seeing a significant return on investment.
So, you shifted your focus to building relationships with your existing customers and improving the overall customer experience.
In addition, you created limited-time offers and exclusive designs to attract new customers.
By doing so, you were able to increase your CLTV and reduce your CAC.
This not only helped you save money on marketing, but also led to more loyal customers who were more likely to refer their friends and family to your business.
Remember, when it comes to marketing metrics, CAC and CLTV are two numbers you don't want to overlook.
They can help you make informed decisions about where to invest your time and money, and ultimately drive sustainable growth for your business.
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