The following for each buyer persona: CUSTOMER ACQUISITION COST (CAC) Small: $315 Mid-market: $12,960 Enterprise: $286,200 If you can’t produce paying customers from a particular buyer persona at a price point below this threshold, you probably shouldn’t be marketing to that buyer persona. However, suppose your digital marketing efforts currently produce buyers from each persona at or below these CAC. In that case, you can use that information to calculate your digital marketing budget. 4. HOW MUCH DO YOU NEED TO SPEND TO REACH YOUR GOALS?
Take your CAC, average purchase order whatsapp database value, and the average number of purchases (if you have a subscription model, you can use the average lifespan of each buyer persona here) and plug them into these equations to determine your digital marketing strategy LTV to CAC ratio: LTV= [Average monthly revenue per customer in US dollars] X [Life span of the customer in months] CAC= [Total cost in dollars to acquire customers in this buyer persona] / [Number of new customers acquired from the digital marketing campaign].
The ideal ratio for LTV:CAC is 3:1 per twelve months, meaning the value of the customer should ideally be three times more than the cost of acquiring them as a customer. A ratio closer to 1:1 means you’re spending far too much on acquiring clients. A ratio that’s higher than 3:1 means you’re likely missing out on business by not bumping up your digital marketing efforts to reach more potential customers. Now, as you might imagine, this approach isn’t a perfect estimate of what it will take to hit your revenue goals. This is only as accurate as the information you provide. But, it’s a lot better than picking your monthly at random and hoping that digital marketing will produce the results you need. How Is Digital Marketing Different on Mobile?