Page 89 - My Marketing Sucks Book
P. 89
Make Sure the Scale Tips in YOUR Favor
To compute your acquisition costs, you would take all your costs of selling and
marketing over a given period and divide it by the number of customers that you
acquired in that period.
For example, you look at last month’s sales salaries, marketing costs, advertising
you spent, that golf outing you took 4 people to and added it up. Let’s say it came
to $6,500. You then looked at total sales for the month and learn you had 325
new customers.
Your cost to get a new customer (CAC) for that month equaled: $6,500 / 325 =
$185. Is that good or bad? It depends.
If each customer spends less than $185 over the lifetime that she does business
with you, it’s terrible. If she spends $1,850+ then I would say you’ve got an
excellent chance at success.
(As we touched upon earlier, your Lifetime Value of your customer is the amount
that you would expect to make from that customer over the lifetime of your
relationship.)
As the illustration above points out, if your cost to GET a new customer EXCEEDS
what you expect to earn from that customer, you’re in a real pickle.
Your Unfair Advantage #13:
Use The Tested and Proven Concepts and Tools
