LTV or CPA: What is more important for scaling a business?
Posted: Wed Dec 04, 2024 9:41 am
When running Pay Per Click (PPC) campaigns or investing valuable cash flow into Search Engine Optimization ( SEO ) to scale a business, hopefully most people are primarily concerned with two things:
In customer lifetime value (LTV)
Cost per acquisition (CPA).
If your primary concern is rankings, impressions, or click totals, think again.
Both CPA and LTV are key performance indicators (KPIs) that are essential for successful performance.
If you don’t know your LTV or CPA, you’re flying blind as you don’t know what moves you should or can make because you have unknown costs. You’re neglecting the bigger picture.
And when it comes to positioning a company, both KPIs play a specific role.
uae telegram mobile phone number list
Group-427320753
Why is customer lifetime value key?
When looking to position your business by attracting new customers, you have a few different options.
Start investing in more advertising (or SEO) to attract new and unique customers.
Upsell to existing customers to increase their spending.
Create more products to reach more target markets.
These are the three main, most common options for scaling a company.
At its most fundamental nature, growing a business means you're either increasing the value of existing customers or growing your total customer base, or both. But none of those three options and the strategies they require are easy, cheap, or even free.
And all of these different actions or tools have an acquisition cost. For example, if you look at the average cost of keywords in your industry on AdWords, this tool will tell you part of the acquisition costs.
Or, look at how many hours you will have to spend writing to create content for your SEO keywords that will drive traffic. How much will the total cost of your labor be?
Each of these acquisition factors adds dollars and cents to the cost of acquiring a single customer.
Before you invest in competitive keywords that can be costly, we recommend that you instead focus on selling to your existing customers.
Why? Because the more existing customers come back and buy again, the more money your average customer brings you.
And you don't have to worry about spending thousands on campaigns. But what good is CPA without LTV?
In customer lifetime value (LTV)
Cost per acquisition (CPA).
If your primary concern is rankings, impressions, or click totals, think again.
Both CPA and LTV are key performance indicators (KPIs) that are essential for successful performance.
If you don’t know your LTV or CPA, you’re flying blind as you don’t know what moves you should or can make because you have unknown costs. You’re neglecting the bigger picture.
And when it comes to positioning a company, both KPIs play a specific role.
uae telegram mobile phone number list
Group-427320753
Why is customer lifetime value key?
When looking to position your business by attracting new customers, you have a few different options.
Start investing in more advertising (or SEO) to attract new and unique customers.
Upsell to existing customers to increase their spending.
Create more products to reach more target markets.
These are the three main, most common options for scaling a company.
At its most fundamental nature, growing a business means you're either increasing the value of existing customers or growing your total customer base, or both. But none of those three options and the strategies they require are easy, cheap, or even free.
And all of these different actions or tools have an acquisition cost. For example, if you look at the average cost of keywords in your industry on AdWords, this tool will tell you part of the acquisition costs.
Or, look at how many hours you will have to spend writing to create content for your SEO keywords that will drive traffic. How much will the total cost of your labor be?
Each of these acquisition factors adds dollars and cents to the cost of acquiring a single customer.
Before you invest in competitive keywords that can be costly, we recommend that you instead focus on selling to your existing customers.
Why? Because the more existing customers come back and buy again, the more money your average customer brings you.
And you don't have to worry about spending thousands on campaigns. But what good is CPA without LTV?