Again, it decreases your customer acquisition cost.

That 100 equals my customer acquisition cost.

That was the customer acquisition cost, CAC, here.

lifetime value needs to be greater than customer acquisition cost.

And what in the end was your customer acquisition cost?

So lifetime value needs to be greater than customer acquisition cost.

Well, in the customer acquisition cost, if all of a sudden, you could get a viral loop going, well, that decreases your cost of acquisition.

And by the way, not only how much does my customer acquisition cost but what's their lifetime value?

He might have only used it two or three or four times. and you don't have the customer acquisition cost because you already acquired that customer.

Assume 3.7 of these 4,025 customers actually converted from acquired customers to activated customers, so the question for this quiz is calculate what was the customer acquisition cost per customer.

And they also understood that social media would be big component in customer acquisition.

This acquisition cost versus lifetime value discussion really is a balancing act.

How much did it cost to acquire a customer? How much did the campaign cost?

But really what they discovered is that they were actually just talking about the customer acquisition portion, or the get portion of customer relationships.

Well, hopefully it gets kind of fun because the real metric the way we kind of measure things, the language we use on the web is customer acquisition cost.

Lifetime value is the customer lifetime value from beginning to end, and just as a note, remember customer acquisition costs acquired over here, needs to be less than customer lifetime value.

But they are trying to see whether that hypothesis about low cost acquisition is possible.

Let's take a look at a customer acquisition process that reaches 100 people a day and activates 10 .

Because if you think about it, you've been working hard on value prop, and you've been working hard on customer segments and customer acquisition and activation and channel.

Customer. Customer ?

EEG acquisition system.

Language acquisition requires creativity.

We've talked about value props, customer segments, channels, customer relationships, revenue streams, partners, resources, and activities, and now we get to cost structure.

They think they'll be able to rent it five times during the year but their shipping cost was about 9, their cleaning cost a dollar processing cost a dollar and their customer acquisition and activation cost 25 a team and so if you take a look at their unit costs you add all this up it's 230 but their revenue was only 199.

Then as we talked about earlier, how much will it cost to acquire a customer?

Seems intuitively obvious but what you want to make sure is the amount of money you're collecting over here is bigger than the customer acquisition cost to remember the amount of money you're spending from here to here.

Customer!

Customer!

Customer?

Customer,

Customer...

I brought you a customer. Customer?

Customer I'm gonna pay cash. Customer

Customer Got some plans for this. Customer

Hey... Customer...

Customer Huh?

Customer 2.50?

Customer 2.50?

Customer Ooh.

Customer What?

Customer Hey?

Customer Sweet.

Customer 2.50!

Customer 2.50!

If we multiply that out, we'll discover that equals about 149 activated customers, and now if we divide the 3,018 by these 149 activated customers, we find out that the customer acquisition cost, the CAC, equals about 20, more precisely about 20.27.