What is a Good Customer Acquisition Strategy?

In this clip from our eLearning series, Allison explores how brands can use the CAC:CLV ratio to understand the health of their customer acquisition strategy.

How do you know your customer acquisition strategy is working?

You can use the CAC:CLV ratio as a good way to understand how your customer acquisition strategy is performing. The CAC:CLV ratio provides a quick view into whether or not your acquisition channels are profitable. A negative CAC:CLV ratio indicates that you're spending more to acquire a customer than they spend with your business whereas a positive CAC:CLV ratio indicates that they are spending more with your business than it costed you to acquire them. However, a healthy CAC:CLV ratio should always be around 3x - that is a customer's lifetime value you should be at least three times as high as the cost acquired to get that customer. In the example below, you can see that the customer acquisition strategy through email channels are working very well as represented by a 3.78x CAC:CLV ratio.

graph of customer acquisition costs

The email channel spent $250K in CAC and got 947K back in CLV representing 3.78x