BusinessDigital Marketing

Customer Acquisition Cost VS Lifetime Value: Digital Marketing

Acquiring a customer for your business and converting him into an actual customer is quite hard for many businesses. Generating a lifetime value not only for business but also for your customer is also very important. Here digital marketing plays an important role by connecting you to your customers every time and ensuring you receive feedback from them.

So in this discussion, we will see how effective digital marketing is in customer acquisition cost and in gaining a lifetime value.

Meaning Customer Acquisition Cost –

Customer Acquisition Cost (CAC) is a business matrix that works on convincing customers to become an actual customers. It influences business overreach. It includes the entire cost incurred in marketing ( online/ Offline), store, and all other expenses. There are various formulas to calculate CAC.  

What is Lifetime Value –

When You add value to your product and make sure to retain a customer again and again and when a customer trusts your product and services he shows his loyalty towards your brand that adds a lifetime value for you. CAC is a part of lifetime value. But yes CAC does not have a clear picture.

Relationship between the Customer acquisition cost and lifetime value – 

To acquire a customer for your business you need to focus on your CAC as the higher the cost of acquisition is the less you will serve your customers so if you cost less in customer acquisition there are more chances of retaining a customer for your brand. There is an inverse relationship between these 2 components. 

If your CAC is high then Your company can not survive in the market for a long time and if you incur less cost in customer acquisition then there are more chances for your growth. 

Thus always maintain a balance between these components.

Signal of customer profitability, sales and marketing efficiency-

Customer acquisition cost (CAC) reflects the marketing efficiency and sales. If your CAC is lower than your sales that means you have more customers for your business. It also depends on the customers that you require for your business vs the number of customers you get. 

If you are getting more conversion and actual customers for your brand then it counts as customer profitability.

Always serve better quality at less cost and convert your traffic into potential buyers. Your product’s price will reflect your market efficiency through its availability in the market.

How does digital marketing influence it?

Digital Marketing plays an important role in your business growth. It reduces your Customer acquisition cost (CAC) by targeting your customer class in less time and produces real results that can be measured effectively.

Through internet marketing services you can reduce your acquisition cost and get more leads for your brand in less time.

It provides you with fast results and shows conversion rate with more efficiency.

Customer acquisition channels in digital marketing –

  1. Email Marketing
  2. Organic Search
  3. Social Media
  4. Paid Search
  5. Direct Traffic

1. Email Marketing –

It is one of the effective marketing tools that help target potential customers for your site. According to a report it acquires 64% of customers for a business. Thus email marketing campaign services is an emerging marketing tool for many businesses.

2. Organic Search

Here customers search and find the relevant results as per their needs so make sure your product/service appears in the relevant search. So choose the best SEO services in Perth for more accurate results.

3. Social Media

Almost 94% of people spend their time on different social media sites thus have a strong social media presence of your brand, to create a brand image in users eyes. Innovation and creativity should be your priority for social media marketing.

4. Paid Search –

It counts to your CAC and can be high and low according to your brand’s search and clicks. Here you will pay for every click no matter if it makes sales or not.

5. Direct Traffic –

Here the visitor directly visits your website without clicking on any other link or site. There are various direct traffic sources like social media, blogs, email, search engines etc. 

Also read – Why Companies Should Hire Digital Marketing Agency to Post Pandemics?

Conclusion –

So here we found that digital marketing contributes to your customer acquisition cost (CAC) and generates lifetime values to your business. It always depends on you if you choose the right online marketing methods that will generate a lifetime value for your business and customers with less Customer acquisition cost ( CAC) and vice versa.

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