The expect lifetime of your customers is then: 1 / 0.145 = 6.9 years. If you are able to reduce the churn to 8% after hard work. The average lifetime increases to no less than 12.5 years. 7. Customer Acquisition Cost (CAC) We have already discussed the concept of customer acquisition Boost sales Encourage cost (CAC) sideways. The CAC shows which recruitment costs can be related to the acquisition of a customer. In formula: CAC = total acquisition costs / number of new customers So suppose we bring in 50 new customers with a marketing campaign that cost $10,000, then the CAC is 10,000 / 50 = $200.
Increase Revenue Incentivize
Again, you can choose whether only directly related costs are includ, such as online advertising, or also overhead, such as marketing salaries. Whatever choice you make, it is important that you work with consistent definitions that are unambiguously apply in the various departments in an organization. Avoid that departments such as finance and Luxembourg Phone Number marketing use different definitions and therefore speak a different language. Case ‘telecom company’ One more note about CAC. As I mention in my discussion of churn, it is essential that metrics are consider in the right context.
Retain new customers Incentivize
A short case to illustrate this. Example of how you can put different metrics next to each other. A telecom company evaluates three different channels: a specialist telecom shop, a retail chain and its own webshop. The sales department of the telecom company is initially extremely satisfice with the retail chain with which an agreement has been enter into. This channel attracts no less than 200,000 customers on an annual basis. The CAC (customer acquisition cost) of the retail chain also looks good and is well below the level of that of the telecom shop. However, the finance department delicately points out a number of other metrics: churn and ARPU (average revenue per user).