Numbers are a concern for all businesses, especially when they start adding expenses. There are many investments, in addition to expenses. The cost of customer acquisition is an example of such an investment. This concept helps us understand the most effective recruitment strategies and how to price our products and services. Randall Castillo Ortega is the founder of SME backer RACO Investment and a financial expert, and provides deep insight into how to calculate customer value.
Attracting new customers costs more than keeping the ones you have. It is good to have a loyalty program in any company. This will allow you to make up for the loss by investing in another. These are just a few of the things companies should know how much they invest. Information is power, and in this case, it is a resource that can help you define your ideal customer and determine the success rate of a campaign. It also helps you identify the most profitable channels.
Considering the consumer’s lifestyle, all this is impossible. This idea is very similar to what we discussed. It directly affects the calculation of customer acquisition costs.
Customer acquisition cost (CAC) is the sum of all the money a business spends to attract customers, divided by actual revenue. According to Castillo, “These funds should include staff salaries, fees for external hires, advertising fees, and implementation tools and materials necessary to retain leaders and convert them into customers.”
Customers who buy from the same company tend to return to it again and again. This can last for months or even years. Customer lifetime is the amount of money a customer earns during the time they stay with the business. Every time the idea is different.
First, you need to get customers. This is where more effort is needed and where the investment described in the acquisition pricing process should be made. Converting prospects into customers is the last part; that’s how you sell. This process requires the same investment as the previous one: backup, email software and human resources to implement the plan.
After closing the market and acquiring customers, the next stage of growth is to maintain the relationship between the brand owner and the user, strengthen it and launch new products and services through a sales strategy or offensive. This method does not see as much money and advertising as the previous methods.
There will also be investments in strategies through email marketing and/or telemarketing. Then you have to look at loyalty. It is important for companies to retain their customers after all the investments they have made.
This will ensure that they do not leave the company and add more value. It is important to set up loyalty programs such as discounts, offers and special products. Castillo adds, “The biggest expense is for workers and equipment.
You need to do something to convert those customers who have already purchased. This plan is worth more than buying it. However, like everything, there must be balance and measure.
The company makes a profit from each customer if the difference between the total investment at each stage of the customer’s life and the income is less than the sum of all investments. These benefits are very important in calculating life cycle benefits. This is done by multiplying the profit by the number of transactions and the number of years the customer has been in business.