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$2, $20 or $__ for every $1 spend

  • JA

    Justin Adelson

    over 2 years ago #

    Instead of looking at it as a monetary unit (i.e. $5.00 for every $1.99) I would look at it as a percentage of your LTV. My target number is usually 33% of the LTV; if I'm selling a one-time purchase product like $50 sunglasses I am looking to acquire new sales at $16.50. However, if I am selling a subscription product like beer of the month club and a monthly subscription is $30.00 but the LTV is $150.00 I'm hoping to acquire new paid subscriptions at $49.50, which is a net loss for a one-month subscription, but a 3X ROI for a six-month subscription.

    Note: My COCA:LTV benchmark changes depending on margins and LTV; a product that has a high margin can withstand a smaller COCA:LTV ratio (i.e. $1 COCA for $2 LTV). Not to mention, if you have a multi-step sales funnel your initial conversion numbers might be a little different. For example, if you are running a lead generation campaign for your business services company and your LTV of a customer is $5000 you should work backward and place a monetary unit for each funnel step as a target:

    $1650 COCA Target (33% of LTV)
    Step 1 - Click: $4.12 (2.5% CTR)
    Step 2 - Email Capture: $16.50 (5% conversion rate)
    Step 3 - Sales Schedules: $330 (20% conversion)
    Step 4 - Sale: $1650 COCA

    You can use these numbers to gauge how well your campaign is doing if you are on track to hit your marketing goals. Of course, the above numbers are completely made-up and are just for educational purposes.

  • CA

    Charu Aggarwal

    over 2 years ago #

    I started a campaign for more followers on my facebook page. So I spend about 23 USD and get 2500 followers. After that my posts are going more engaging.
    Facebook page: https://www.facebook.com/DigitalScreaming/

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