Three Numbers to Know — Cost of Customer Acquisition, and Value of a Customer

Three numbers you should know: the cost of customer acquisition, cost of customer retention, and  value of a customer.

Also, know the difference between your average cost/value and your customer-specific cost/value.  Average cost/value is useful for planning and projecting.  But for management and strategy, you’ll want to know customer-specific cost and value.  Why?  Because then you can try to find more prospects that look like them, for the most profit (and probably the most fun).

As part of your marketing or demarketing analysis, these calculations should turn into what your sales team calls “qualifying criteria” for evaluating leads.  A sales team that isn’t obligated to qualify its leads is a sales team that’s going to cost you real money.  But sales teams aren’t usually the kind of folks who like to spend time on analysis.  If you’re the boss, or if you’re the marketing chief, you need to make these numbers happen.  Get to it!

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