Calculate & maintain a healthy customer acquisition cost

[naomi_kramer]

@chadrwyatt
Fix formulas
Get rid of image that you expect readers to read
Add more detail about free trials
Add missing LTV/CAC info
Fix Segment your CAC step
Rewrite Fix any leaks in your sales funnel step

Fix formulas

@chadrwyatt

Calculate your CAC: Total Spend on Acquiring Customers / No. of Customers Acquired .

For formulas, use the backtick character before and after: `
(throughout)

@chadrwyatt

Calculate the LTV of your customers: [ARPC (Average Revenue Per Customer in a Month) X Gross Margin] / MRR Churn Rate.

Use parentheses (), not square brackets.

Get rid of image that you expect readers to read.

@chadrwyatt

Text-heavy images are generally bad. Discourse can create tables - the easiest way to do this is to transcribe the image into a spreadsheet, copy the cells you want, and paste into your Discourse post.

Add more detail about free trials

@chadrwyatt

Adjust your CAC calculation if offering free trials. For example: CAC for March (14 day free trial) = [(48000 + 33000)/2]/1100 = $37.

This is a good attempt, but you’ve left out too much information and the result is confusing. Need to add in more info from the blog post.

Add missing LTV/CAC info

@chadrwyatt

Calculate the LTV of your customers: [ARPC (Average Revenue Per Customer in a Month) X Gross Margin] / MRR Churn Rate.

According to most experts, the LTV/CAC ratio should be at least 3 for a sustainable business (i.e., a new customer should bring at least 3X value of what they cost to acquire).

LTV/CAC of less than 3 is a red flag, as it indicates you’re overspending on acquisition. It’s a sign that you need to review CAC of your prominent channels and look at the growth marketing funnel to understand where the fault lines are.

This is an awesome job! Just add this bit from the blog post:

The opposite is also true: three or higher means you can afford to spend more aggressively to acquire new customers.

Fix Segment your CAC step.

@chadrwyatt

Segment your CAC to prioritize channels like Search Ads, Social, and Content Marketing.

This is close, but you’ve misunderstood a little. There are two points here:

• Calculate CAC for each customer segment
• Calculate CAC for each channel, like search ads, social, and content marketing (note the lack of capitals).

They still belong in the one step; you just need to reword the step to make it clear that you’re talking about both points.

Rewrite Fix any leaks in your sales funnel step.

@chadrwyatt

Fix any leaks in your sales funnel using a tool like HubSpot Academy.

Whups - no. Remove the tool reference; I think you misread.

Here’s the pertinent information:

• keep track of conversion rates across the entire funnel.
• optimize funnel stages where leaks are occurring.

This is a good example to include:

For example, HubSpot Academy wanted to increase its sign-up rate. They used a simple exit-intent survey widget from Hotjar to ask visitors why they were about to leave the page:

Visitors gave answers such as: “I don’t know how this will help me with my career?” or “I cannot make an account. The form keeps asking me about a company name while I’m a jobseeker.”
By making adjustments in their landing page based on the feedback, they were able to increase conversions by 10%, leading to a direct impact on the CAC.