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Analytic example: company X is selling soaps at $5 apiece, and when X manages to attract a consumer through its marketing campaign, this customer will purchase, on average and during its lifetime, for $800 of soap. Therefore, X can incur a maximal acquisition cost of $800 per customer (notwithstanding the time value of money).

When launching a marketing campaign for your business, it is extremely important that you closely monitor the three above indicators, for they will determine the efficiency of your campaign and will thus impact the profitability of your company. Striving to improve these indicators will result in substantial gains and is always worth your efforts.

For instance, achieving a higher potential rate can be done by reformulating the text, sound or pictures of your ads (which are the characteristics that will first catch the attention of people).

increasing your conversion rate can be done by understanding better the segment of people you are targeting: some are emotional buyers, while others are rational ones. In this respect, you should always keep in mind that what matters even more than the product is the mental image that people will have developed of the product. Also, you must endeavor to gain exposure to these people who might be potential customers and refrain from spending your marketing dollars in campaigns that will get you a too broad exposition: indeed, your conversion rate will be higher when you are facing a highly-specific audience, and thus your acquisition costs will be lower.

What about the average lifetime value of the customers ? It will be increased by providing them with quality products (which is obvious, since a customer will buy more only if he is satisfied with its previous purchase).