17 December, 2013

1-5-8 finance: Allowable acquisition cost

How much will you be willing to spend to get a new customer?

-          The higher the lifetime value, the higher you can spend
-          You can spend like A LOT to acquire a customer, and that would be a GREAT financial decision on the long run
-          On the initial sale you will be definitely losing money (= going negative). But the thing here is that your customers by buying from you, they would be singing up for a 'continuity' program

  • An important note here:
You have to keep them for the speculated lifetime with them for the acquisition cost to be worth it, or else it wouldn't be worth it