CAC and LTV
Customer acquisition cost is what you spend to win one paying customer; lifetime value is the total margin that customer contributes before they leave for good.
Analogy Mental model
You spend fifty units on a flyer campaign and a free gift to win one member. Over the next two years that member spends enough to generate fifteen hundred units of profit.
In practice What you actually do
This is the vocabulary that gets search discussed in the boardroom rather than the marketing meeting. Advertising costs rise as auctions tighten and vanish the day spending stops, while content acquisition costs are front-loaded and thin out over time as old pages keep producing. A healthy model keeps lifetime value at three times acquisition cost or better.
Where people get burned Pitfalls
Compute acquisition cost honestly, including salaries, freelance writing, link spend, and tool subscriptions. A flattering calculation that excludes half the input is discovered eventually, and the credibility lost costs more than the number gained.
This entry was written in English from the Chinese original, not machine-translated. Read the Chinese version →