SEVENTH LESSON | INTRODUCTION TO DIGITAL BUSINESS
Recover investments in visibility for each individual customer and calculate the value of a customer’s life cycle (Customer Lifetime Value, or CLTV) requires analysis accurate and monitoring of different aspects of a digital activity.
To recover the investment in visibility linked to each customer, it is necessary to calculate the cost per customer acquisition (Cost Per Acquisition , CPA). This number represents how much it costs to acquire a new customer considering marketing and sales costs. Once you know the CPA, the goal is to generate enough profit from each customer to cover this cost and get a return on your investment.
CLTV represents the total amount of money you expect to earn from a customer over the entire period they remain a customer. It is calculated by adding up the entire profit you expect to make from a customer over the entire duration of their relationship with the business. A simple formula to calculate CLTV is: average profit margin per transaction x number of repeat transactions x average length of customer relationship.
To be successful in digital business, it is necessary to monitor the entire process in its various phases, from acquisition to conversion, from loyalty to retention. Each phase should be analysed, measured and optimized to ensure the effectiveness of your strategies and maximize the profitability of your business.
How do you recover investments in visibility for each individual customer? And how do you calculate the lifetime value of a customer? We must monitor the entire digital business process in its various phases. How to do? Prof Fabrizio Barbarossa explains it to you in this lesson of “The Prof’s advice” .