If I spend $100 to acquire a customer, when does the speaker say the customer becomes valuable?

Mike AndesFounder, Augusta Lawn Care and Homeworks · Founder of Homeworks and Augusta Lawn Care

Want to know if a customer is valuable? Compute profits and Customer Acquisition Costs!

28 Apr 2024 · 0 min

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0:26

Mike Andes explains how to tell if a customer is worth acquiring. Compare what you spent to get them against the profit they generate. If CAC is $100, they're valuable once they've earned you $101. Prepayment shortens the path to profit.

Questions this video answers

When you make $101 in profit (i.e., after recouping the $100 acquisition cost and earning $1).

My customer acquisition cost. If I spend $100 on a customer, I want to get that money back as fast as possible. My time to value that customer becomes valuable after they become profitable, and so they become profitable after I've recouped the cost of the acquisition. So If I spend $100 to get them, when do I make $101 in profit? Because that's when they actually become valuable. And I can make that happen faster and sooner and grease those wheels by collecting prepayment upfront.