LTV tells you about your acquisition costs
Posted: Sun Apr 06, 2025 9:40 am
Once you've increased your customer lifetime value, you can spend more on acquisition.
Higher LVT equals more space for acquisition. You know your average customer will spend more than the acquisition cost, which will allow you to create more extravagant and bold designs to retain customers.
Instead of focusing so much on keyword costs, content creation fax lists costs, or how much a link costs, you can focus on creating a better acquisition strategy.
You are not limited to such a small budget.
LTV tells you your CPA . If you don't know your customers' LTV, you can't know what the right CPA is, since everything depends on your customers' spending.
For example, if your LTV is $120,000 and you spend $3,000 on acquisition, it's child's play.
But if you don't know your LTV, suddenly $3,000 doesn't seem like it's within your budget and profit.
The problem is that the CPA doesn't necessarily tell you your LTV.
For example, just because you spent $500 to acquire customer X, it doesn't mean that customer automatically has a high LTV.
Overspending your LTV is a recipe for bankruptcy.
But if your average customers have a high LTV, then you can spend much more on acquisition.
This gives you room to try bigger and better strategies like direct mail and account-based marketing, where you can spend more money on high-value, targeted campaigns.
For example, years ago an agency focused on web design and development, they adopted an account-based marketing approach to acquire high-value clients.
Their LTV was generally high, which allowed them to spend more money on elaborate acquisition campaigns to continually repeat the cycle to close large sales.
Using direct mail and a little cheesy creativity, they created direct mail content to drive brand awareness and interest.
Higher LVT equals more space for acquisition. You know your average customer will spend more than the acquisition cost, which will allow you to create more extravagant and bold designs to retain customers.
Instead of focusing so much on keyword costs, content creation fax lists costs, or how much a link costs, you can focus on creating a better acquisition strategy.
You are not limited to such a small budget.
LTV tells you your CPA . If you don't know your customers' LTV, you can't know what the right CPA is, since everything depends on your customers' spending.
For example, if your LTV is $120,000 and you spend $3,000 on acquisition, it's child's play.
But if you don't know your LTV, suddenly $3,000 doesn't seem like it's within your budget and profit.
The problem is that the CPA doesn't necessarily tell you your LTV.
For example, just because you spent $500 to acquire customer X, it doesn't mean that customer automatically has a high LTV.
Overspending your LTV is a recipe for bankruptcy.
But if your average customers have a high LTV, then you can spend much more on acquisition.
This gives you room to try bigger and better strategies like direct mail and account-based marketing, where you can spend more money on high-value, targeted campaigns.
For example, years ago an agency focused on web design and development, they adopted an account-based marketing approach to acquire high-value clients.
Their LTV was generally high, which allowed them to spend more money on elaborate acquisition campaigns to continually repeat the cycle to close large sales.
Using direct mail and a little cheesy creativity, they created direct mail content to drive brand awareness and interest.