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If your CAC is too low, your exposure will be limited and you will spend less on marketing efforts. While it may look good on paper in the short term, you'll be missing out on huge growth opportunities in the long term. CAC can also grow much faster in percentage terms than LTV while remaining profitable. $10 CAC to $100 LTV is technically inferior to $70 CAC to $170 LTV. The difference to cover other costs and margins is $90 compared to $100 in the second scenario. In conclusion, lowering your CAC doesn't always have to be your goal. When considering CAC adjustments, you need to consider LTV, customer base growth, and overall marketing effectiveness. 2. Use CAC alone for performance advertising channels As tempting as it may be, don't try to segment your CAC by every marketing channel. It only works on performance channels like PPC .
There are two reasons for this. We've already covered the first one, so here's the second one. Linking the CAC to Australia Phone Number Data another marketing channel locks the CAC into short-term decisions. For example, it makes no sense to measure her CAC for display campaigns. This is because these ads typically appear early in the customer journey , when most people who see the ad are not ready to buy or even aware of the product . On the other hand, when it comes to performance channels, Google Ads has built-in functionality equivalent to CAC. This is called cost per conversion. You can get this channel-specific cost per conversion and use it to optimize performance for that channel. However, you may think that it does not fully reflect the CAC.
Indeed, this only covers the cost of the last step of the customer's journey. However, you can't attribute the costs of other channels to this, so this is the best you can do here. Attribution is allocating credit to the marketing channel that contributed to the conversion. Imagine a soccer player receives a pass from three of his other players, and furthermore he scores a goal after one teammate clears the way. Everyone contributed to scoring the goal. However, most companies are unable to make their marketing work this way.
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