Business startups require customers. How you acquire and retain those customers is essential to the growth and longevity of your company. This is an important balancing act that you will have to learn to master in order to stay ahead of the game.
Customer Acquisition – 3 Things to Consider
Get yourself prepared
Be sure that your product is ready for market. Before you can attract consumers your product must be free of any kinks or flaws. You will be wasting money and most likely deterring customers from future business with your company if there are major problems with your product. We all know that nothing is perfect, in the heat of the moment little things slip through the cracks. Have a support team in place to politely handle customer complaints to minimize loss in loyalty. Next sit down and decide on what resources you will use for marketing. Make a list, and remember to be detailed in these three points: assessing progress, be on top of the schedule, and how many employees are necessary for each task.
Get a feel for what your CAC might be
Your CAC (Customer Acquisition Cost) is how much you’ve spent on sales and marketing per certain amount of time, divided by how many customers you gained in that time. CAC will help you realize the potential of your marketing plan. You will understand how much revenue you can generate and if it will be enough for expansion. Estimating your CAC depends on the product or service you are selling. From your business plan you should have a rough idea of the market you will be competing in and with that data draw an estimate of how many customers you could possibly gain.
Balance your company’s CAC and LTV
One of the most important factors in growing a business isn’t just acquiring customers, its keeping them for the long hall. LTV (Long Term Value of a customer) is the amount of business you expect from a client over a certain period of time. Balancing the CAC and LTV is the key to growing your business. A good balance to shoot for would be three times as much LTV than CAC. Because you have more LTV, you can cover the costs of gaining new customers. Keeping this balance is key to succeeding and growing your business.
Remember to always be prepared, have your product and team ready to satisfy and keep your customers. Estimate your CAC and once you have customers, do the right things to keep them coming back in order to recover CAC and make a profit.
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