Ever-Rising Acquisition Costs Make Investments in Retention a Wise Move
The cost of acquiring new buyers is always on the rise. However, the cost of retaining a loyal buyer is a fraction of the cost to acquire a new one, making retention a very wise investment, as Chargebacks911® COO Monica Eaton-Cardone explains.
Monica is a leading expert in helping merchants optimize their profitability and ensure business sustainability. In the latest installment of her monthly column for Newsmax Finance, she points out that overly-focusing on acquisition can have negative consequences for your long-term prospects.
“When retailers invest heavily in acquisition but fail to properly analyze the outcomes, they can end up paying big money for a one-time order,” Monica says. “…or, even worse, a refund or chargeback that results in a net loss. That’s why it’s critical to focus on quality over quantity, which means making an effort to determine your customers’ lifetime value.”
You must weigh two key calculations against one another: customer acquisition cost (CAC), and customer lifetime value (CLV). “This means that a customer who makes ongoing purchases over a period of years has greater value to a merchant than multiple customers who place a single order,” she says.
Monica also provides tips to help merchants boost retention and improve their CLV. Check out the full post below.