The first stage of Lifecycle Marketing is to attract interest. In layman’s terms this means traffic. You may have heard that content is King, and it is. It’s true that you don’t want your traffic all dressed up with nowhere to go.
Now let’s assume (Insert your own donkey joke here > ass-u-me) that you have content to send traffic to. This could be an EBook, Your Newsletter (more on that later…), Your Product/Services page, etc.
Do yourself a favor and don’t make the FIRST mistake that most small businesses make. Don’t rush out and start advertising through Google pay-per-click ads.
The FIRST thing you need to know before you spend money on advertising is your Customer Lifetime Value (CLV).
CLV is the total net profit a customer will bring you over their lifetime. CLV can be as simple or complex as your business demands. For illustrative purposes, let’s start at simple. Customer Lifetime Value is the average value of the sale multiplied by the number of times the sale occurs, multiplied by the number of months your customer stays with you.
Let’s use the gym as an example. My wife has a gym membership and pays $35/mo for the privilege of saying she has a gym card. She is billed monthly. I’m guessing the average time people stay members at the gym is 2 years. If that were the case, the CLV for that gym would be:
CLV = ($35) x (12 months) x (2 years)
CLV = $840
So what does this all translate into? This means that if I’m the gym owner, I had better not spend more than $840 to acquire one of my members or I will be losing money.
In other words, my Customer Acquisition Costs (CAC) should be below $840.
So the next time that fancy billboard salesman knocks on your door, you’ll have a compelling argument as to why you can’t spend $2k/mo to only capture the 2 drivers on the road who stare at billboards while the rest of us are staring at our cell phones. 🙂