Last Episode # 202 Best Time To Be a Small Business 📲
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Stop playing the guessing game!!
Single Most Important Metric You Should Know As a Business Owner is…..
Cost Per Acquisition (Cost per acquired lead)
First of all you should know and let’s say if you don’t how can you determine how much to spend on marketing?
How do you know how much should you spend to acquire that customer?
Let’s say that you are a Dental clinic and the lifetime net value of a customer is $1,000 so I can illustrate how to use this to back into your cost per acquisition thresh hold. Now, depending on the type of company, margins, and a few other factors, the general rule of thumb is to allocate on average, 15 percent of the customer lifetime value to acquisition cost.
This means for this example, we are willing to spend $150 to acquire a new customer from any marketing channel.
Let’s say that you are a Roofing company and the lifetime net value of a customer is $8000
Using the general rule of thumb is to allocate on average, 15 percent but you can take 5% of the customer lifetime value to acquisition cost. which will come down to: $400
You can start at $400 and overtime with optimization and tweaking the campaigns bring that cost down.
This will vary channel to channel and here is how you will get better at bringing this cost down. Example you will find when you start tracking it, you will get to compare the data among different channels. But if you don’t even know or if you are not tracking it then you are playing a guessing game.
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