A quote from Mr. Wonderful from ABC’s Shark Tank
So Mr. Business Owner, what is your customer acquisition cost and the life time value of your customer?
As you often see on the show, the owners who know these numbers like the back of their hand are often in the best position to run their business, while scaling them profitably.
The following white paper will help you answer Mr. Wonderful’s question for your business.
Note: This white paper is written for the average small business owner with deep detail on how to calculate customer acquisition cost and lifetime value of a customer.
In order to consider spending on any advertising platform, it is first important to decide what you can afford to spend on advertising to acquire a new customer, while also determining their lifetime value to your business.
There are several ways to do this, but the following formula has guided me well throughout my career and in my personal pursuits of raising capital. I have raised over $500,000 from strategic investors following the “advertising rules to grow your business” below. And to run your business effectively, you need to know your Customer Acquisition Cost (CAQ) and Lifetime Value (LTV ).
As a client of ShoppeSimple Network, I want you to be prepared to answer these CAQ and LTV questions on any advertising platform. In fact, you will reduce your overall business stress when you know these CAQ and LTV numbers. Knowing your business marketing/advertising do’s and don’t numbers will give you the guidance (no emotion) to understand which marketing programs work, and which don’t. The ultimate goal is to STOP the advertisement programs that do not work or meet your CAQ/LTV metrics, and do more of those that do provide results.
Here are a few metrics you need to know to make the CAQ and LTV calculations.
Collect your data on the following questions: