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Marketing ROI is an important part of every strategic marketing plan. LTV:CAC is an important indicator of marketing ROI.
Marketing Return on Investment (ROI) is an important part of every business and marketing plan. Business need to know if what they’re doing to get more customers is working (or not). It’s not just about sales – there are other measures that can provide business a path to success.
- Customer Acquisition Cost
Customer Acquisition Cost or CAC is one of the most important measurements for any company in general – how much does it cost to acquire and keep your customers?
Calculate your total marketing and sales cost in a period and divide by the number of new customers in the same time period. https://valuo.io/preview/samplecalculators
You want, of course, a low CAC, otherwise, it indicates that you have an inefficient marketing and sales function.
- Ratio of Customer Lifetime Value to CAC (LTV:CAC)
LTV:CAC is an excellent indicator of marketing ROI if you have a revenue stream that relies on subscriptions or any situation with recurring customer revenue.
How to calculate it: take the revenue you get from a customer and subtract the gross margin. Then divide by cancellation rate, and then compare it to the customer’s CAC.
This ratio shows you if you are getting a positive return rate on what you spend to keep that customer – ideally you want a higher LTV per customer. https://valuo.io/preview/samplecalculators
- Marketing-Originated Customers (MOC) (How many customers came from marketing initiatives)
Determine precisely which of your sales and marketing efforts generate new customers. Use measurement’s like dedicated 800 numbers or microsite or other tools that help you capture more data, take a holistic approach to marketing.
Choose the time period you want to calculate your MOC, then count the number of customers that came in via marketing and then divide it by number of total new customers from the same time period.
- Business Measuring Metrics: Improving Your Marketing Efforts
valuo knows measurement and metrics are a vital part of marketing, and with the technology available, there’s every reason to use them to help you formulate plans that can help make your business better. visit valuo.io to learn which measurement tools are best for your business and which mediums are most effective to advertise your business or service.
- Learn more at www.valuo.io and www.xAlt.co
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