Customer acquisition cost and Lifetime value are two essential metrics for you to understand.
In conversion, we talk about the Entry Point Offer – this is the first step for most of your customers as they start working with you. Often the entry point offer is break even meaning that the money you earn from your entry point offer is close to the amount you pay to acquire a customer.
This isn’t always the case, but it is often the case.
So how do you make money? Profits come from the additional products your customers purchase from you. Your entry point offer may be breakeven, but your total expected lifetime value must be significantly greater than the cost of acquisition.
In the materials section of this lesson, we include a funnel calculator that you can use to calculate your cost of acquisition. The posts below go deeper into explaining Lifetime Value and Customer Acquisition Cost.