CAC

I mentioned CAC, Client Acquisition Cost, in the last blog. If you spend £1,000 on marketing and that gets you 10 opportunities to do business. The acquisition cost of each opportunity is £100. If you convert 1 in 5 opportunities the acquisition cost of a client is £500. It is important that you know this number.

Is £500 too much to acquire a new client? Well you can’t possibly know unless you also know the lifetime value of your average client. If you make £150 profit on every client transaction clearly the £500 is too much. It means that you have lost £350 in acquiring that client.

However if the client buys from you every month and sticks with you longer than 3 months you are ahead, just. But if the client stays with you and buys monthly for 10 years you have won big style. That is why it is important to know these numbers, client acquisition cost and lifetime value and to use that information in consciously designing your business model.

So the questions for today are:

• What is your Client Acquisition Cost?
• What is the lifetime value of a client?
• How can you tweak your business model to optimise for growth?
• What opportunities does this open up for you?

If you need any help, reach out

Many successful business owners eventually hit a wall on growth and struggle to climb it alone. When you work with me you get a fresh perspective, a solid plan, and customised coaching so you can grow and scale your business safely and at speed.

To check whether I can help you on that journey https://calendly.com/iankinnery/canweworktogether