ROI is return on investment, TLV is the average amount of
revenue paid to a business by a customer over the lifetime of the relationship
(and not just based on one average sale, but rather over the course of the
business relationship). So, it is also
crucial to know what your customer retention rate is before you calculate TLV. Finally, COCA is the cost of customer
acquisition. It’s the total amount
invested to bring in a customer. To
calculate COCA, you add all of the costs involved in the marketing, salaries,
overhead, etc.
So, let’s say we have the
following:
TLV=$700K
COCA=$15K
We would then calculate the ROI with this equation:
700K-15K/15K = 45.66%
It is important when using social media as a
marketer because we can use this information to help lower your COCA. Furthermore, many social media sites are
generally free for business usage, and as such, can significantly lower your
COCA.
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