Customer Acquisition and Lifetime Values

Having the "Right" kind of customers can make or break a business.  The "Right" kind of customer is the kind where the cost of acquiring the customer is very low, and they continue to purchase from your business for extended periods of time, even increasing their purchases over time.  In other words, they have a very high Lifetime Value vs. Cost of Acquisition.

As a business, there is always going to be some cost associated with getting customers.  The costs can come from different media channels that you choose to advertise on, e.g. Facebook Ads, Pinterest Ads, or search ads such as Google Ads, or Influencers, or even Referrals.  It can even be the implicit cost of being on various aggregated seller platforms such as Amazon, or Shopify.  The cost of acquiring a customer directly affects the profitability of the business.

Even though attribution is hard, you have to measure the effectiveness of your Ads, or efforts in acquiring customers, especially those of the "Right" kind.  You could just be throwing your money into a black hole with no difference in outcomes, depending on the channels that your business uses.  But once you have paid up the cost of acquiring a customer, you have to measure the benefit that customer provides to your business.

The problem of measuring customer lifetime value coming from various different channels, is that you can't wait until a suitable set of customers have passed through their lifetimes to decide which strategies to optimize for your business.  This is why you need a prediction of their Lifetime Values early on in the engagement of customers to decide where to put more money into various different channels for customer growth.  Our AI software gives you these predictions, and what features to optimize to increase lifetime values.

Morning Brew is a successful newsletter business.  They have 3 million subscribers and made $20 million in revenue in 2020, with about $6 million in profit.  They found that readers acquired from ads in other newsletters were 2x more valuable than readers they got from Facebook, or referrals.  So they concentrated all their new acquisition spending to come from other newsletters.  Contact us for a demo.