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Content Marketing and Customer Acquisition: How to Calculate Your CAC, CLV, and ROI

by Mo Harake  |  
March 27, 2017

A series of weekly videos shared on Facebook generated 15 new customers for you over the course of a month. Pop quiz: is that result worth the effort you put into it?

There's no way of knowing: You need to identify acquisition costs, marketing spend, lifetime value, and more; you need to compare stat A with stat B. In short, tou need to put the data into context.

Content marketing in 2016 was an undisputed champion. A full 60% of marketers create at least one piece of content each day. Content marketing leaders experience traffic growth that is 7.8x higher than that of content marketing followers. Inbound (i.e., content) marketing costs 62% less than outbound methods, but generates 3x as many leads.

But (there's always a "but") some may question the point of it all. Sure, content marketing spreads brand recognition, assists with SEO efforts, and builds your reputation and authority, but is that enough?

If you're on the content bandwagon but don't know your customer acquisition cost (CAC) and customer lifetime value (CLV), you're playing a dangerous game: You might be spending thousands on blog posts or infographics and assuming it's worth those seven new clients you picked up, but is it really worth it?

To some, it always comes down to dollars and cents. They want to see facts and figures that demonstrate the monetary value of the strategy. In the past, that kind of talk had content marketers gasping, clutching their chests, and muttering about "engagement this" and "awareness that" under their breath.

But you can show the financial side of content. It can even be simple. And you need to do it to understand the big picture.

Ready? Even if math scares you a little, I promise this won't hurt.

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Mo Harake is managing director of digital marketing firm Stray Digital. For more on his approach to content marketing, e-commerce, and growth hacking, visit him at the Stray Digital blog.

LinkedIn: Mo Harake

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  • by Jim Edwards Mon Mar 27, 2017 via web

    Great info. Thanks, Mo.

    While I understand that the point of your insight was to focus on an ROI model, just as important are KPIs... Key Performance Indicators. The sum of properly conceived KPIs roll up into the ROI.

    I would be interested in your thoughts on how KPIs roll up, using your calculations.

    Great stuff... thanks again and best wishes.
    Jim Edwards
    (Purposely not including contact info, because that wouldn't be polite. This is your article.)

  • by Rick Vosk Mon Mar 27, 2017 via web

    Thanks, enjoyed the article. In the following portion where you show how to calculate historic CLV, shouldn't it say "multiply" rather than "divide"?

    To calculate the historic CLV, you add up every transaction from the first (T1) to the most recent (Tn), and then divide by the average gross margin (AGM is sales revenue minus the cost of goods sold).

    CLV [Historic] = (T1 + T2 + T3Ö+ Tn) * AGM

  • by Vahe, MarketingProfs Mon Mar 27, 2017 via web

    @RIck, you're right. I've made the edit.

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