Find the Perfect Balance in Your Customer Acquisition Cost Calculations
It can be very tempting, when starting out with your iGaming venture, to acquire customers any way that you can. However, if you intend to be successful and really make a go of it, you’ll need to learn how to calculate customer acquisition cost, or CAC for short.
Customer acquisition cost means knowing how to balance your total sales and marketing costs to acquire each new customer. Knowing how to calculate this vital ratio can often be the make or break of any enterprise, particularly new ventures.
Learning how to calculate customer acquisition cost (CAC) is all about balance. Whether you choose to market your brand via social media, paid advertisements, professional marketers, or content marketing, CAC principles should always be applied.
The balance between being too cautious with your CAC and too liberal with your spending is vital. Why? Because, if you are too cautious you will more than likely miss out on much needed customer acquisitions. This, in turn, will lead to a reduction in revenue in the future (repeat business).
On the other hand, if you are too liberal with your marketing budget, you may well end up with fewer profits at the end of the day. This will naturally lead to a dangerous scenario, where fewer profits could mean the end of your enterprise.
Ultimately, the perfect CAC solution is to strike a good balance between what you spend in the course of your new customer acquisition campaign, and not placing your acquired customer life time value or LTV (ongoing or return revenue) at risk.
This is what is known as the CAC/LTV ratio, also known as the ‘god ratio’, and is used across the board by successful iGaming enterprises, both in casino and sports betting arenas.
As a rule, your CAC figures should not exceed your LTV numbers. This would be considered a poor or unsuccessful CAC model. By contrast, when your CAC figures are lower than your LTV numbers, you’re sitting with a successful or healthy CAC model.