Wow…where did the last few weeks go. The CNE is about to ramp up which means the summer is winding down. It’s been a few weeks since the last blog post so I’m trying to play a little catch up.
In doing a little research I came across a great blog on Subscriber Acqusition Costs (SAC) versus Customer Long Term Value (LTV) and thought I would share it with you because it’s quite informative.
People working in the telecom industry are pretty familiar with the concept of SAC and LTV but this is the first time I’ve seen a good article on how they’re linked. The article is written for entrepreneurs and start-ups but the application is much broader.
The key principles are that 1) SAC should be LESS than customer LTV and 2) SAC should have an ROI of < 12 months. These are both good metrics to live by because it ensures that your sales & marketing activity is generating a profitable customer. Not all businesses operate this way especially ones that are trying to grow rapidly, they tend to ignore the basic measure of SAC and look for customer growth only. This works for a short period of time or until the cash runs out.
A well managed business finds the right balance between SAC and LTV…..how is your business doing?
