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CAC, nCAC or LTV: Which one should you use?
How do you know the viability and scalability of your business? Which metrics should you use to be able to justify your marketing spend, predict customer value, and optimize your acquisition strategy for long-term success?
In this video, Usama Khan talks about the importance of CAC, nCAC, and LTV, and shares real-world examples of how to calculate and interpret these crucial metrics. You'll learn:
- The difference between Customer Acquisition Cost (CAC) and New Customer Acquisition Cost (nCAC)
- How to calculate Lifetime Value (LTV) and why it's critical for your business
- Using Shopify's customer cohort analysis to derive actionable insights
- How these metrics apply to different business models (e.g., subscription vs. one-time purchase)
- Balancing acquisition costs with expected customer value
- Making informed decisions even with limited data
Whether you're running an eCommerce store, a subscription service, or any customer-focused business, this video will give you the tools to make data-driven decisions that can significantly impact your bottom line.
Usama breaks down complex concepts into easy-to-understand examples, making this essential viewing for anyone looking to grow their business strategically.
0:00 - Introduction to CAC, nCAC, and LTV metrics
2:54 - Understanding LTV and its relationship to acquisition costs
6:00 - Using Shopify's customer cohort analysis for metric calculation
9:59 - Limitations and practical applications of these metrics
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