The majority of business models are based in a paid model. You acquire customers and they cost you money, so you have a customer acquisition cost (CAC). This needs to be compensate with the customer life time value (LTV) in order to build a growing and sustainable business. No matter what is this relation when you start (normally CAC>LTV), you only work as an entrepreneur is to reach this other situation, where CAC < LTV. So, the difference (LTV-CAC) is the money that you have to grow your business acquiring more customers.

How?

In one hand, CAC depends on what and how you use certain channels. There are lots of decisions that can be made to strategically reduce that cost and make your business profitable (or more profitable).

In the other hand, LTV depends directly on revenues and customer retention. However, LTV is a metric with more complexity. You can always increase the price of your product, but it might not be always possible. Instead you can increase retention, but there are lots of decisions that can be made to increase it. You could approach different segments of customers, looking for the ones that use more your product; or you could look at different markets, like countries where you value proposition fits better with the customer’s behavior, or improve a part of you product (usability), or launch in a new platform (mobile, Facebook,...), or extend the value proposition (offering something else that allows you to monetize better your existing customers).

There are lots of possibilities, and all of them cost you time and money. How to find out the better set of decisions that can boost the growth of your business? We will try to answer this question.