The type of business and sector. Let's take an example. Imagine you run an online guitar accessories store and it takes a buyer three years to make a second purchase. You would probably call him a new client. But , it makes more sense to consider it a returning customer. To define a customer's status, you can use an old trick: segment your regular customers and observe their purchase frequency . Consider the average time gap between one purchase and another, defining the threshold based on it. Subscription businesses offer an advantage: a returning customer is always someone who restarts a subscription after they leave, generating new periodic revenue. What is meant by total customer acquisition spend.
The term total customer mobile number list acquisition spend" typically includes: Salaries of the sales and marketing team Advertising costs for the acquisition of new customers Sales and marketing hardware and software costs Outsource agency, PR and other sales and digital marketing expenses The total of these costs divided by the total new customers gives you the CAC. An advice? For more accurate data calculate the CAC of new and returning customers separately. Relationship between LTV and CAC: the value depends on the duration A customer who pays €100 for a product is less valuable than a subscriber who pays €100 a week for a year. However, the customer acquisition cost calculation treats them the same
If they both convert from marketing activities. You need to crunch the process: divide Customer Lifetime Value (LTV) by CAC (Customer Acquisition Cost) and more accurately measure the effectiveness of customer acquisition . Customer Lifetime Value refers to the total revenue a customer generates over time . To calculate it, three factors must be taken into consideration: Average order value Number of repeat transactions Average interval between purchases If you don't consider the LTV, the CAC tells you very little about the success.