Step 1: Know What a Customer is Worth (CLV)
Over time, a customer spends money on you.
The total money they spend while being your customer is called Customer Lifetime Value (CLV).
How to Calculate CLV:
On Average How much do they spend each time?
On Average How often do they come back per year?
On Average How many years do they stick with your business?
→ Multiply these numbers together to get their total value.
Step 2: Keep Some for Profit
You don’t get to keep all the money customers spend.
Some of it goes to buying products, paying rent, and other costs.
What’s left is profit. This is why we keep the cost of getting a new customer (CAC) lower than their total value (CLV).
A Good Rule: Spend about 1/3 of a customer’s lifetime value to get them.
Step 3: Test Strategies
You might spend on Google Ads, Facebook ads, or flyers, but you’ll know the limit.
If getting a new customer costs more than the CAC, the strategy isn’t working, and it's time to change something in the ad.
And the best marketing budget is…
As much as you can afford, because once you get your marketing locked in, it will multiply your money forever.
The more you spend, the quicker you can optimize.
Talk soon,
Titus Nash
I wrote a free guide on how to get more clients from meta ads. If you want it just click on the link here.
If you want Free feedback / advice on your marketing from an expert, click here.
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