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Customer Segmentation & Analysis
Terms
- What are customer acquisition costs?
- Customer Acquisition Cost (CAC) = total marketing & sales spend ÷ new customers acquired. It's your cost per new customer. Example: $10K spent ÷ 100 new customers = $100 CAC. This metric is crucial for evaluating marketing efficiency and overall business profitability.
- What is customer lifetime value?
- Customer Lifetime Value (CLV): The total revenue a customer generates throughout their relationship with your business. Calculate it to optimize acquisition costs, retention strategies, and predict future revenue streams. Smart companies focus on maximizing CLV, not just individual transactions.