What Is Customer Acquisition Costs and Lifetime Value Of Customer ?

Today, I read an article explaining about Customer Acquisition Costs and Lifetime Value of a Customer. So I thought of sharing the definition of these terms that I understood.

Whats Is Customer Acquisition Costs ?

It is defined as the cost spent to acquire or get a customer to your business. In general, acquiring the customer involves giving your service (say, selling a product). You may have to spend money to get new customers (that’s one of the way) by means of advertising. But as a means of measuring this you have to find out, how much money that you spent to get one customer. There comes the customer acquisition cost.

Example.

Say, you are spending 1000$ to get 10 customers then Customer Acquisition Cost is 100$ per customer. For your business to gain profit, your customer has to buy products from you for more than 100$. So it all depends on how far you are utilizing the customer for your business ?

What Is Lifetime Value Of Customer ?

It is defined as the revenue generated from an acquired customer for the lifetime. Once you acquired the customer, it all depends how you are devising the customer into repeat customer. What drives to make him repeat customer ? Its a simple answer, Quality service. Yes, when your business serves quality service or quality product you shall gain and hold the customers for the lifetime.

Example.

Say, you got a customer for 100$ and for the first time you are generating a revenue of 120$ from him. When that customer likes your service & he comes back again. This time you are making another sale for 120$ that means you gained 120+50 = 170$ from a single customer as profit. As said earlier, it all depends how you are devising a customer into repeat customer.

So as a business, you have to maintain the value of a customer high and customer acquisition cost as low in order to gain profits for your lifetime. The quality of your business plays major role in deciding this trend.

I would like to thank Sitepronews.com for creating an awareness through their article (Track And Measure Your Advertising, Customer Acquisition Costs, And The Lifetime Value Of A Customer).

Like This Article ? Get More Tips via RSS or via E-MAIL

Recommended Money Making Products :

• Start Making Money Using Drop Shipping Solutions
• Maverick Money Makers - You Can Start Using It 15 Minutes From Now
• My Online Income System - Profitable Home Business in a Week
• PaidSurveysOnline - Highest Converting Paid Opinion Site Since 2002!

Related Posts

• 8 Steps To Build Customer Confidence For an E-commerce Business? For any kind of online business, it is required to build the customer confidence. Its more important for an ecommerce business. You must position yourself as a reputable organization...
• Gaining Targeted, Satisfied, Repeat Visitors Importance Than Making Money Do you know visitors are more important than money and profits ? Are you working only for gaining visitors and not for making money ? Is that a right statement...
• How Online Advertising Is Important For Online Business ? In order to give life to your online business, advertising is important. Online Advertising is the platform used to take your online business to targeted audience ie., to the...
• How To Improve Your Website Income ? Now we are going to learn, how to improve your website income ? In general, every successful website has more readers, more visitors and they will make more money. That’s...

Rate this topic:

(No Ratings Yet)

 Loading ...