#SPS16
FollowThisWebinarOnTwitter
#SPS16DemandGenReport:@DG_Report
AndrewGaffney:@agaffneyAct-On:@ActOnSoftwareMattZelen:@Matt_Zelen
#SPS16
AboutDemandGenReport• Trackingstrategies&solutionsinlead
generation&marketingtechsince2007
• Dailynewsandanalysis,specialreports,originalresearchandliveevents
• Newsletterreaches40,000readers
• Additionalresourcesat:demandgenreport.com/resources
@DG_Reporthttp://linkd.in/DG_Specialists
#SPS16
JoinTheConversation
Submityourquestionshere
Downloadtoday’sresources
Jointheconversation#SPS16
#SPS16
• Shareonsocialusingthehashtag#SPS16• Referacolleaguetoattend• Submitquestions&answerpollsduringthewebinar• Takeourpost-webinarsurvey• BONUS– Attendall#SPS16sessionslive
ParticipateToBetterYourOdds
#SPS16
FeaturedSpeakersMODERATOR:AndrewGaffneyEditorialDirectorDemandGenReport
MattZelenChiefCustomerOfficer
Act-OnSoftware
@Matt_Zelen
Agenda
• Overview of CLV/CAC ratio and why it’s important
• Understanding Customer Lifetime Value (CLV) & Customer Acquisition Cost (CAC)
• How to use the CLV/CAC ratio in day-to-day marketing decisions
Modern B2B marketers have
learned to coexist with chaos
Marketers are inundated with metrics that offer
countless ways to dissect and evaluate their campaigns
The Formula to Find ‘True North’ on Your Marketing Map
“The expected lifetime value of a customer represents the maximum allowable acquisition cost of that
customer. Then using those numbers, you can craft a marketing budget that is related to firm profitability versus some
fussier method of budgeting for marketing expenses.”
—Ruth Stevens, President, eMarketing Strategy
http://contentmarketinginstitute.com/2014/01/content-marketing-plan-focus-lead-demand-generation/“ “
CLV/CAC Can Help Answer Crucial
Questions
Are you finding your most valuable customers?
Are you targeting them effectively?
Are you making the most of the relationship once you win their business?3.
2.
The word “lifetime” is the one that matters when looking at what the term
really means to marketers. What is CLV?
Two Rules Will Get You 90% of The Way
There
These are common-sense marketing metrics. It’s important to keep them that way.
Consistency is key. Pick the right formula for your business and use consistently.
2.
How Should You Calculate CLV?
What is the average sales value of your first transaction with a customer?
How much do you typically make per year from a customer after the first purchase –including cross-sell and upsell revenue (if relevant)?
How long does a typical customer continue to do business with you? (The answer, ideally, will be in years – not months or weeks.)
3.
2.
How Do I Know if My CLV is Good or
Bad?
How much you spent to acquire a customer
Whether businesses like yours typically generates significant revenue from return/repeat customers
How much you typically spend to maintain these ongoing customer relationships3.
2.
What’s the Most Important Mistake to
Avoid When Calculating CLV?
The biggest mistake, by far, comes back to the word lifetime –
marketers who calculate customer value based only upon the value of
the first sale.
How Can I Use CLV to Improve Marketing
Effectiveness?
1. A complete view of CLV allows you to track the impact of your customer onboarding,
retention, upsell / cross-sell and loyalty programs
How Can I Use CLV to Improve Marketing
Effectiveness?
2. CLV can also be used to determine how much should
be spent on marketing investments
3. By identifying and comparing your “best” customers’ CLV to the average CLV for your customer base as a whole, you’ll be able to determine how much those “best”
customers are truly worth – and how much you should invest in acquiring
them.
How Can I Use CLV to Improve Marketing
Effectiveness?
Divide the amount your marketing organization spends on customer
acquisition during a specific period by the number of customers acquired
during the same period
How Do You Calculate CAC?
How Do I Know If My CAC is Good or
Bad?
What’s the best way to uncover this cost to value ratio?
This is where CLV/CAC once again enters the picture
(I promise we’ll get there!)
What’s the Most Important Mistake to
Avoid When Calculating CAC?
A lack of context when you calculate CAC and use this
metric to make decisions and assess marketing effectiveness.
Fine-tuning your email, landing pages, forms, and other touch points
Improving on-site ecommerce conversion metrics
Experimenting with tactics such as inbound and referral programs
3.
2.How Can I Use CAC to Improve Marketing
Effectiveness?
An Example of CQ
For CLV let’s assume a customer generates $50,000 in revenue during a three-year timeframe.
For CAC let’s assume it cost $15,000 to acquire this customer.
Using CLV/CAC (50,000 / 15,000) we get a
quotient of 3.33
7 Keys to Getting Your Bearings When Analyzing CQ
The CQ is (within reason) a self-contained marketing metric
The CQ is a historical metric rather than a predictive metric
The CQ offers a clear “redline” for identifying urgent and fundamental business problems
The CQ can’t tell you whether a business is (or will be) profitable
1
2
3
4
5
6
The CQ can include customer retention costs
… but including retention costs is not always important or helpful
7 The CQ offers powerful insights to assess marketing performance and support a marketer’s decision-making process
A few of the 4,000+ customers that can attest to this vision
We believe in making it simple for any marketer to master today’s customer journey.
We enable marketers to focus on strategy, creative, and customers -not the underlying technology.
www.act-on.com | #ActOnSW | @ActOnSoftware
Questions?
Contact Us:+1 (877) [email protected]
See a Demo:www.act-on.com/live-demo
#SPS16
Q&A/SpeakersMODERATOR:AndrewGaffneyEditorialDirectorDemandGenReport
MattZelenChiefCustomerOfficer
Act-OnSoftware
@Matt_Zelen
Top Related