Measure marketing by the cost of acquiring a customer (CAC) and their value, not by the cost per click. Cheap clicks look good in a report, but they do not pay invoices. What matters is how much a customer costs you and how much they bring you; only that shows whether the campaigns make money.
Key takeawayCPC (cost per click) is an input, not a result. Track CAC (cost per customer) and LTV (customer value). If the value of a customer is significantly higher than the cost of acquiring them, marketing is working.
Why cost per click is misleading
A low cost per click can mean cheap but low-quality traffic. Conversely, a more expensive click from someone ready to buy may be the better deal. A click says nothing about whether the visit turns into a job.
The numbers that make sense
- CAC: how much one acquired customer costs you.
- LTV: how much a customer brings you over the whole relationship.
- The LTV : CAC ratio: healthy companies tend to have at least 3 : 1.
- Conversion rate: how many visits turn into an enquiry.
How to start measuring properly
- Set up conversion tracking, not just traffic tracking.
- Connect advertising data with real jobs.
- Calculate customer value, not just the first order.
- Decide based on CAC and LTV, not on cost per click.
This is how we report as well; details at performance marketing. The connection to the whole system is at Growth System™.
Frequently asked questions
What does the abbreviation CAC mean?
CAC (Customer Acquisition Cost) is the cost of acquiring one customer: total marketing spend divided by the number of new customers.
Chcete vědět, co z toho platí pro vás? Sestavte si roadmapu na míru: 6 otázek, 2 minuty, výsledek hned.
Sestavit roadmapu zdarmaWhat LTV to CAC ratio is healthy?
A ratio of at least 3 : 1 is generally considered healthy: the customer brings in at least three times what it cost to acquire them.
Why is tracking cost per click not enough?
Because a click does not pay invoices. A cheap click without a conversion is more expensive than a pricier click that brings a job. What decides is the cost per customer, not per visit.
Do you not know how much one customer costs you? Let us work it out together.
Zjistěte za 2 minuty, ve které fázi růstu jste a na co se zaměřit nejdřív. Roadmapu vám pošleme i na e-mail.
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