Lifetime value (LTV) is the total revenue that a customer spent on a business in its lifespan. It is also known as Customer Lifetime Value (CLV). The calculation of LTV is very important to estimate the economic condition and profit of a business. Lifetime Value is a key component to determine the market value of a company. As with each new customer, the revenue increases so it can give a clear view of the value of each customer. Customer Acquisition Cost (CAC) is the amount you invest to get a new customer. If your lifetime value is greater than CAC then it means that you are getting more revenue as compared to the cost that you are spending to get new customers. So, for the establishment of your business, Customer Acquisition Value (CAC) should be less than the Customer Lifetime Value (LTV).How to measure LTV?Customer Lifetime Value is not just limited to the relationship of a customer and company until the time of purchase, but it is the long-term relationship, determined by how much revenue was curated by one customer over a number of touchpoints. There are many ways to calculate LTV but it can be calculated through this simple formula given below.Lifetime Value (LTV)= ???????????????????????????????? ???????????????????????????? O???????????? A G???????????????? P???????????????????? ÷ Churn R???????????? Of A C???????????????????????? O???????????? A G???????????????? P????????????????????‘Customer revenue over a given period’ means how much revenue you get from a customer in a specific period, such as 15 days or one month etc. Whereas, churn rate is the percentage of customers who leave you after a specific period.Suppose that if your customer revenue is $4,000K and the churn rate is 100% then the total LTV can be calculated as:Lifetime Value (LTV) = 4,000K ÷ 100Lifetime Value (LTV) = £40KIn the monthly calculation of LTV, if the values of both revenues and churn rates are greater, there will be very little variation in LTV. If your LTV is less than the CAC, then you must think about where you should put effort to avoid a loss in business. You can easily grow your business to try and keep your LTV higher than your CAC.
Customer Acquisition Cost (CAC) is the cost of acquiring a customer to purchase products. It works along with the Customer Lifetime Value (CLV). CAC is an important term for growth businesses.If a company knows the cost of bringing a customer on, it can get a clear vision of its capital requirements in reaching a specific level of growth. It is the total spend on digital marketing and other direct costs which the company has deployed to attract customers.It is a simple measure which can tell us a lot about the performance and return of investment. Once you have some parameters between which the company oscillates on a regular basis, it is easy to interpret. If the CAC is increasing, then it means that you are getting worse results flowing from the marketing efforts. It may be that a specific campaign does not resonate with the target audience or maybe it is becoming increasingly competitive to position the company through specific digital channels. It may be time to consider alternative channels, maybe a different messaging campaign.What if the CAC is decreasing?It might be a temporary advantage, a great campaign or a message that really draws the customer to your website, to your product.In time such efficiencies tend to disappear, due to competitive pressures and of new similar products in the marketplace.How to measure your CAC?If you want to measure the actual cost of customer acquisition then you must know about its formula. The formula of the customer acquisition cost is as follows:Customer Acquisition Cost = ???????????????? ???????? ???????????????????? + ???????????????? ???????? ????????????????????????????????????÷ ???????????? ???????????????????????????????? ????????????????????????????????CAC is the sum of the cost of sales and marketing per new customer acquired.What elements are considered or should be considered in CAC? Here is a list of potential elements which you may want to consider:· The total cost that you are spending on digital marketing· Total salaries that you are paying to your employees directly involved in sales and marketing activities, usually only those who have acquisition quotas· The total cost that you are spending on creating content· Publishing cost that you spent to publish your ads on TV, newspaper (above the line marketing)· The cost spent for the maintenance and software updating if used anyExampleHere is an example is given through which you can easily understand the concept of measuring Customer Acquisition Costs.If you are running a clothing brand and the total cost of sale is £400,000 and the cost of marketing is £300,000, across multiple social media channels. In the same period you gained 1000 additional customers then the total CAC can be calculated as:Customer Acquisition Cost = ???????????????? ???????? ???????????????????? + ???????????????? ???????? ???????????????????????????????????? ???????????? ???????????????????????????????? ÷ New Customers ????????????????????????????????Customer Acquisition Cost= £400,000 +£300,000 ÷ 1000Customer Acquisition Cost = £700Why Measure your CAC?By measuring CAC, you can easily understand any trends or pattens in your business you may want to profit from or protect against. Measuring dynamically, month on month is essential, always recalibrating with new types of expenses or systems you are using to reach your customer.There is an optimal level where you are able to predict and finance growth. It takes many optimisation exercises and practice to assess the best point to be more aggressive in the market and not waste your capital.
When an existing customer makes a purchase again, this is called repeat purchase, and retaining these existing customers is less expensive than acquiring new customers. Several reports have also shown that existing customers make a promising profit to a seller in comparison to new customers. To inspire a customer for making its second or third purchase, several strategies can be opted by businesses:Engaging customers post-purchase by targeted messaging is equally important for repeat buying behavior. Usually, brands cease their targeted messaging activities after the initial purchase is made which makes a negative impression in the mind of consumers. These targeted messages can be sent using emails, in-app notifications, and pop-ups, and so on.Different patterns in buying behavior and intent of customers can be observed at different stages of the purchase. For instance, in the case of replenishable items, it is important for businesses to use their marketing automation strategies in real-time. By sending relevant reminders on time can re-engage customers in making their purchases.An effective strategy can be the use of promo codes, discounts, and coupons. Rewarding customers on their purchases encourages them to make their purchases again from the same seller. For this strategy, one should also have a solid strategy for promotional events behind such incentive programs because too much use of such programs can spoil the purpose by creating a negative brand perception that will ultimately result in a loss of revenue.Advertising your stuff for customers who visit your site without making a purchase can bring them back for purchasing action. This is done through the use of a code snippet to see a customer’s interests. Now the customer’s preferences and interests can be noted by the content they watch on social media. Catching the customers through their content searching can make a seller or brand identify their target customers more easily to provide them with the right advertising content to motivate them for purchases.Also, loyalty programs make customers loyal to their specific brand or seller. The gamified points system, discounts, and offering early access to your new products and services can also make customers coming back to the same store. This is especially an effective strategy in the case of replenishable goods.
Every business needs to put resources into marketing since this assists you with keeping up with durable associations with your clients. Great marketing helps brands gain support, hold clients, increment deals and develop the business.Scaling a business organization on the web or offline isn’t simple on the grounds that there are countless organizations rivaling one another. Henceforth, you require a brand marketing methodology to enhance your presence all around the world. This is the reason the job of a marketing head is so critical for the development of your image.The Marketing Head is answerable for executing the overall marketing strategies and techniques of an organization, like getting ready the marketing ideas, choosing and arranging objectives of upcoming campaigns, investigating the efforts of rivals, and setting the plan of marketing spending.To find the best head of marketing for your business one should look out for the following skills in a person:Excellent communication skillsUX design skillsContent management skillsEffective negotiation skillsSEM skillsTeam-building skillsAnalytics skillsSEO skillsSocial media skillsStrong networking skillsCreativity and writing skillsHiring a marketing director is challenging. The new director shouldn’t only have a bullet-pointed list of appropriate skills but also love leadership roles and always be able to mentor colleagues. There are several mediums where you’ll post your available job and begin accepting applications. Here are the simplest channels to hire a director of marketing for your company:It is a challenging role to find a great head of marketing. Not only the right skills but also a leadership and mentoring attitude is required in becoming a head of marketing. Some of the best channels which can be used for finding a great head of marketing with appropriate skills and attitude are:LinkedInLinkUpMonsterScoutedLaddersSimply HiredZip RecruitersGlassdoorIndeedRobert HalfBesides these platforms, tapping into the network of your family, friends, colleagues, former coworkers is also a quite good way to reach out to the best-fit person for the role of marketing head.Next, you should also go for posting your message on social media handles as they are taking over the world on all grounds. This post may be shared further by your followers and a suitable person may reach out to you for taking the position of marketing head.Another step that can be effective in finding a great marketing head is going for employee referral programs. This process is also time-saving as compared to the job posting and carrier sites.After getting the right pool of candidates on your board, similar steps of recruitment should be performed as we mostly observe. Interviewing the candidate with a keen investigation about their expertise and knowledge is important to reach out to the best person among a number of candidates.
When it comes to advertising, many companies seem to throw money away as the engagement levels they’re receiving from their paid campaigns are so low. Fortunately, for you, as an marketer or entrepreneur who may be on a tight budget, this blog shares some insightful strategies that can be effective when it comes to increasing the performance of future campaigns:Advertising strategy:Without recognising the right strategies to suit their operations, many organizations try every tactic they know about and assume that return on ad spend will come. Instead, developing a solid and effective strategy of advertising based on the most suitable platform for their company will allow the organization to invest effectively. For a company it may be more suitable to invest in blogging and digital content; for another company, it might be more suitable to invest in targeted and paid social media ads. This should be decided by a whole team, and collectively a call should be made about the best allocation of budget and investment of time, finances, and energy.Campaign goals:To manage your advertising budget, the focus should be made on one or two campaigns at a time. Your goals for these campaigns should be defined and based solely around what they company seeks to get out of each campaign. Set the right target audience for your campaign and decide the ways in which your campaign will reach them. Also, define your success parameters. By the end of your campaign, assess if each goal has been achieved.A great way manage your ad spend but also make sure you’re not wasting money or timeUsing budget template:Another suitable way of managing your budget is to go for a budget template. Depending on the size of your budget and needs, one can find so many various options of templates to try out and see what works best. Once you have found the right budget template, continue to regularly visit and keep it updated.Tracking the expenses:To better understand the spending patterns of your organisation and return on investment, all marketing expenses, including those allocated to your advertising campaigns should be reviewed. However, keep in mind that if several people have access to company cards for the purpose of advertisement expenses things might get complicated for you. To avoid such tricky situations, you should choose an appropriate financial tool to track your advertisement budget or expenses accurately, which is easily accessible to your whole marketing team. A number of applications and programs can be used, that are easy to use for employees for making invoices of expenses that can be viewed and approved by the senior management further.Selection of media:If you focus on a media-based strategy for your business, then it should be carefully determined which media type is most suitable for your audience. Not every type of media is suitable to cater to your decision. For instance, television is used for targeting a large audience but for the engaging audience, one can also found social media more appropriate.All these factors are important for managing the advertising budget in a good way.
It is the most complex process an early-stage company must go through. A channel is not just about the name of providing a platform to sell. The confusion is common. A channel where you position the product might take you to the platform where you sell, but not all the time. In other words, it represents the medium where you can get the greatest audience reach, potentially the cheapest way to have huge visibility. An example could be TikTok, an amazing channel for specific types of products for video materials and most important catchy viral trends. The platform where you sell could be Shopify.Assessing which channel works best for your company and particular product is a complete process or a series of steps that follow to achieve business goals.Choosing the best channel refers to the selection of a platform that fulfills all the requirements to meet the expectations of the business owner. It starts with assessing the customer personal, social, and demographic characteristics which feed into your decision, but it then expands to data you have available from tests across multiple channels and data you enhance to get better insights.In is quite normal to change strategies depending on specific product ranges, countries and even type of content to enable you to optimise the cost of acquisition.You might want to consider the following while you search for the best channel for your product:Cost-effectivenessCost-effectiveness is a way to determine that whether this channel will prove economically viable for your business or not? Does it require more resources or money to maintain or run the activity on a particular channel, or creating the content?Some businesses in the venture capital space at times run campaigns at a loss, they pay more for a lead than they get in Lifetime Value. It is acceptable if you are just launching and creating a buzz about your company.The same strategy could be completely unsustainable in the long run.Ease of accessThe best channel provides you the ease of accessing the products for customers. It enables you to be first to the audience, building loyalty, a community feeling. They buy your content and values as much as your product.If you are selling to the gaming community, you may consider YouTube Gaming or Twitch. If you are targeting young professional mothers as an audience, you may consider Facebook or LinkedIn.Every customer profile will demand a different approach. Ask yourself where your ideal client is spending their time, and how much of it. Run tests, validate your assumptions. Learn and test some more.Marketing and CreativesThe most expensive element if find the right channel is creating engaging content to promote your brand. It is much easier to get virality with video than any other form of content, yet the production usually sets a high bar which start-ups cannot meet.It is easier for established brands to get mass publicity just by virtual of having budgets dedicated to curating and producing the best channel appropriate content.In early-stage, founders are faced with challenges, and you always must compromise on key elements, select the marketing and creative collateral that are within the means given. Building on what works at one level is the best way to progress towards more expensive strategies, potentially involving TV ads, videos, and celebrity endorsements.Small businesses face substantial hurdles while opting for a good channel for products. While choosing the best channel proper guidance is very necessary. You must keep in view all the above factors to select a beneficial channel. Improving on this process will enable you to find faster, cheaper ways to reach your audience, improve your brand recognition and increase conversion.
Revenue based lenders (RBLs) are the next new thing in Europe, with many new funds dedicated to this new way of non-dilutive finance.It is a simple product, meant to help founders with working capital. Cash is advanced to founders, at a rate of 1x to 1.5x their revenues. The repayment happens at a fixed percentage of their revenues, between 10% to 25% which is dependant on the risk rating.Unfortunately, with RBL’s there are cases when pricing is not necessarily clear to the founder, especially if you consider multiple loans throughout the year or are gradually increasing your debt exposure.Often, it is presented as a friendly solution, and it can be for founders with a slightly elongated sale cycle where they have the ability to manage cash-outflows from equity or reserves.With RBLs, the payments are not fixed, and vary from month to month until the balance is repaid. The lender gets the regular amount of income dependant upon the percentage of revenue.Many founders are starting to realise that there is more to the story than a what RBLs advertise (‘simple fixed fee’). In some cases, they end up being higher than what was originally presented to the founder.One thing is clear the fixed fee is not an annualised interest rate. The reality is that if you took the facility again, another fixed fee would apply to the new loan. If your company is growing quickly then you could end up recycling the cash and taking 3 or 4 RBL facilities per year. It means that a great company end up paying somewhere 18%-36% on an annualised basis depending on their credit rating. If we add to this the fact that many of these companies will be increasing the loans to cater for a growing business activity, it is easy to see how lucrative the model is.At Juice, we are fundamentally entrepreneurs, building businesses similar to those of our clients. We think that both our message and the way our products operate needs to align.We have created products where founders can access a revolving credit facility without having to apply for multiple credit applications. In some cases, we need to scale our facility sizes over time, to allow them to grow and build resources for their ad campaigns, or inventory. In other cases, we would not want our companies to be over-exposed, especially if they are dealing with cyclical or seasonal businesses. Juice has been created for companies that are on a mission to bring unique products to their consumers.What to keep in mind before going for RBL?Although revenue-based financing has many benefits and appears as a simple product, there are elements founders should pay attention to before opting for this source of funding:Not for new businessesLenders always check the revenue graph of a company before investing money in its business. They have certain rules and eligibility criteria. And if any business does not fulfill the criteria the lenders do not invest their money. So, the revenue-based financing is not for the newly established businesses.Capital costIn Revenue-based financing cost of capital is very high. Because you have to invest much more interest rather than the real investment. However, the monthly payment process makes the high-interest rate accommodatable.Prepayment incentivesA revenue-based lender does provide you prepayment incentives. Prepayment incentives are the discounts or pre avoided interest that lenders offer to the borrowers to encourage. But the revenue-based lenders do not provide such kinds of incentives So, that’s the reason revenue-based financing is not preferred.Monthly paymentsRevenue-based lenders require monthly payments.In starting a business may face some financial issues and maybe they are not able to pay monthly payments. So, revenue-based financing is not suitable if you have not started selling your products or the profit graph of your business is not high.Long-term paymentsIn revenue-based financing, a borrower has to pay interest for the long term because of the high amount of loan. So, it becomes a very long-term process to pay all predetermined amounts to a lender.
Ad Management SystemsAd management systems allow people to advertise their products on social media to reach more users. Content providers connect with an ad management system and provide content according to the products.Ad Management ToolsThere are many ad management tools available that can handle campaigns across different platforms, including HubSpot, AdRoll, RollWorks, Influ2, Adstream, 6Sense, and Celtra. These systems can help you execute complex strategies for your marketing, enabling founders to understand their user journey to acquisition, as well as running optimisation to reduce CPA or improve conversion.Improving performance, retargeting, and mapping the cadence a user will go through from awareness of your product to buying, is not a simple exercise especially across many social media platforms. Other systems can help founders aggregate and normalise data:HubSpotHubSpot helps to lead the audience to get new opportunities. It also enables an adviser to get the targeted audience. It allows you to share your ads on social media such as Facebook, LinkedIn, or Instagram to increase the reach of your product to as many people. You can keep track of your marketing campaign and get an idea about the public engagement of your content. It is a free tool, but you can also use its premium version to get advanced features.AdRollAdRoll is a tool that helps you to manage your ads by providing many features. It provides AI-based recommendations to target an audience. It also helps you to increase customer lifetime value by offering affordable product deals. And it also allows you to connect with the customers through email or other sources of connections.RollWorksRollWorks is an account-based tool. It helps to target the audience through account identification. It handles sales tasks and prioritizes account-based advertisement. It keeps track of your marketing campaign and helps you to automate your sale emails. Its starting plan costs almost $975 per month.Influ2Influe2 is a tool used to identify your business progress through the engagement of each individual in an advertisement. It provides informative content to engage customers through ads. Moreover, you can collect data about the customer’s email or other social media accounts that show the engagement on your ads.AdstreamAdstream is an all-in-one tool. It helps you to handle customer engagement, media analysis, and automation. It automatically adjusts your content of ads through the content comparison shared around social media or the Internet.6Sense6Sense also provides all the features that other tools are providing. But it uses AI, big data, and machine learning to identify the marketing value and audience behavior towards your advertisement and products. It is also an account-based tool that collects customer data to maintain its audience record.CeltraCeltra is a cloud-based advertisement tool that provides a user-friendly interface. It provides dimensions and metrics to understand your campaign better and achieve your marketing goals.Find out more about Ad Management solutions on Capterra.