Understanding these startup fundamentals ensures progress

In the world of startups, many small things matter, helping to advance.

To advance a startup, experts have coined several small terms that help improve it and generate profits. These include CAC (Cost to Acquire Customer) and Customer Lifetime Value (CLV). Understanding these terms is crucial for expanding a startup's reach. Let's explore these terms and their meanings...

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How much does it cost to acquire a customer?

CAC (Cost to Acquire Customer) simply means how much it costs to bring a customer to a startup. This can be understood with an example. For example, if you earn ₹100 from a product and it costs ₹200 to sell it, it means the business is unsustainable. Even if you're using it to promote the product at the beginning of your business, a good strategy dictates that the lower the cost to acquire a customer, the better the business will be. This is the sign of a good business. However, if the cost to acquire customers is too high, it means the startup won't be sustainable. Experts say that if this cost is too high, the business can't be sustained for long.

What to do then?

Startup industry experts say that if the cost to acquire customers is too high, then marketing strategies need to be revised. Make marketing smart, not expensive. This will lead to a profitable deal.

What is Customer Lifetime Value?

Whether a startup is small or large, customer lifetime value must be considered. Simply put, it's the amount of money a customer can contribute to your business over their lifetime after purchasing a product. This is called customer lifetime value. If someone purchases a product once, this value increases, but if they only purchase your product once in their lifetime, its value decreases. Simply put, the higher this value increases, the more the business will grow. Therefore, any strategy you develop should be based on this.

Why did customers avoid the product?

Startup experts say that any business should always be interested in knowing whether customers are avoiding their product. If so, why are they doing so? Online polls, offline or online surveys, or research can be used for this. Furthermore, the traffic to your online platform also provides a clear picture. Create monthly reports and even prepare an annual report. To understand why consumer behavior is changing, you can adapt strategies and correct mistakes.