One of the most difficult questions my clients wrestle with is, "How much is a new customer worth to you?" A customer's value isn't static. It can shift based on economic factors like GDP or inflation, and also as your business model evolves.
It's a challenging question, but one that you absolutely must be able to answer in order to strategically set a marketing budget and evaluate a campaign's success. That means being able to identify a metric that you'll use to know how much you're willing to spend to acquire a new customer.
Initial contract value or average cart price. The lifetime value of that customer, which consists of recurring revenue-potential services like software, subscriptions, professional services, upsell opportunities, and referrals.
How much money does your business want to make this quarter or this year? With some simple math, you'll be able to determine how many leads you'll need to achieve your goals based on current knowns.
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