Not a Trick Question
Is customer acquisition an expense or an investment?
That depends on how you make money.
Some businesses make most of their money on a single transaction.
The only way for them to increase their bottom line is to sell to more people.
In that business model, it makes sense to look at customer acquisition as an expense - and work to keep it low.
But for service and advisory businesses like yours and mine, there's a better number to focus on - customer lifetime value (CLV).
We have the opportunity to have long-term relationships with our customers (sometimes for life). It makes sense to invest in those relationships up-front - because we know they will pay dividends later.
If you sell widgets, focus on minimizing your customer acquisition costs.
But if you have a relationship-based business, focus your energy on maximizing your CLV.
Yours for smarter marketing,
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