Month: October 2022

If you want to secure your brand’s healthy growth and profitability in 2022 and beyond, the LTV : CAC ratio is an essential metric to track. It compares your customer Lifetime Value (LTV) and Customer Acquisition Cost (CAC), showing you how much your customers are worth versus how much you’re spending to gain more. 

Hence it allows you to plan your spending and strategies across your sales, marketing and customer service teams, to ensure the long-term health and success of your business.

In other words, the LTV : CAC ratio is a KPI you need to be paying attention to in 2022.

In this article, we’ll be going through what this metric means, how it’s calculated and why it’s important to monitor this ratio as your business grows.

 

 

What is CAC?

CAC, or Customer Acquisition Cost, is the total cost needed to attain a new customer, over a specific time period.

It includes your marketing spend (e.g. ad spend and creative costs), the overhead used when drawing in new leads and converting these into paying customers, plus salaries and commissions. 

Once you’ve calculated the amount spent on bringing in new customers, versus the number of customers you’ve actually attained, the CAC is a valuable way to measure your business’s profitability. 

You’ll be able to find out the efficiency of your efforts and spending across your sales and marketing processes, and how you can improve on this and reduce your CAC.

 

How to calculate your CAC

First decide on the time period you wish to analyse (the month, quarter, or year). Within this scope, add your total marketing, and divide this by the number of new customers you’ve acquired.

This will give you the estimated cost of attaining a new customer.

For example, if your business spends £100k on marketing, and acquires 500 new customers, your CAC will be £200. As 100/500 = 200.

In other words, the estimated amount you’ll need to attain each new customer would be £320.

 

What is your customer LTV?

 

 

Your LTV, or Lifetime Value, is the expected revenue that a customer brings during their relationship with your business. 

It allows you to predict how much revenue you may expect to generate from an average customer, once they make their first purchase from you.

By paying attention to this metric, you’ll be able to assess how you can improve on this, and nurture your customer relations to ensure customers return to purchase again and again.

 

How to calculate your LTV

By following this step-by-step process, you’ll be able to calculate your average customer Lifetime Value.

1 – Calculate your average purchase value (divide total revenue within a specific time period by the total number of purchases).

2 – Calculate your average purchase frequency (divide the total number of purchases by the number of unique customers that have converted).

3 – Multiply these two values together to find your average customer value.

4 – Then calculate your average customer lifespan by averaging out the number of years customers continue to purchase from your business.

5 – Finally, multiply your average customer value by your average customer lifespan to get your customer lifetime value (LTV).

The next step is combining these two values to find and analyse your LTV : CAC ratio.

 

The LTV : CAC ratio

 

 

Divide down your calculated LTV and CAC to a simple ratio (x : x). For example, if your LTV is £900 and your CAC is £300, your ratio divides down to its simplest form of 3:1.

If your LTV : CAC ratio gravitates closely around 3:1, this indicates a business with a healthy growth potential. Aim for this approximate benchmark as a sign of business success.

 

But what if each value is higher/lower than this benchmark?

If your ratio gravitates around the 1:1 mark, it may seem as if you’re breaking even. However, it’s likely that you’ll be losing money per acquisition as additional costs may not be included in your calculations (such as shipping costs and taxes).

If your CAC is higher than LTV (e.g. giving a ratio of 1:1.5), you’re spending more to attain new customers than you’ll ever make back from them. This means you’ll be significantly dipping into your potential profits.

If your LTV gives you a higher ratio value than 3:1 (e.g. 5:1), this indicates a growth opportunity. It could mean you could be spending more on your marketing and sales efforts to attract new leads and customers.

 

Why is this ratio important to use right now?

As can be seen above, once you’ve calculated your LTV : CAC ratio, you’re able to evaluate how to improve your internal processes, and consequently improve your business’s growth potential and profitability on a long term basis.

By incorporating this metric into your analysis and reporting, you’ll be able to secure your business’s healthy long-term growth and success.

The LTV : CAC ratio is also a reliable way to indicate your business’s long-term health to current and potential investors.

 

How you can improve your LTV : CAC ratio

Here are a few examples of ways you can achieve a LTV : CAC ratio that gravitates more closely around the 3:1 benchmark:

 

1 – Avoid relying solely on paid ads – as they drive acquisition costs up considerably, so make an unsustainable sole focus when looking at long-term growth.

 

2 – Invest in your CRO (conversion rate optimisation, or the process of converting visitors to leads, and leads to converting customers). For example, look into optimising your site and checkout process for online conversions, and spruce up your copy and content to engage customers and push them further along the customer journey.

 

3 – Give value to your current customers. By listening to their suggestions in customer feedback and reviews, and nurturing your customer relations with rewards and loyalty programmes, you’ll encourage further conversions.

 

4 – Implement a customer referral programme. Referred customers will already be familiar with your brand and product line (lowering your CAC over time), and referring customers are more likely to make repeat purchases with referral rewards (increasing overall LTV).

 

5 – Utilise CRM platforms to optimise your sales funnel. CRM tools will facilitate the process of nurturing leads into paying customers, giving your sales team the time to grow their databases, and consequently increase the number of generated sales.

 

6 – Focus on retention with your email/SMS marketing. Through these channels, you’re reaching more engaged customers with a potential for many repeat purchases (both via campaigns and post-purchase automations).

 

 

By ensuring your marketing, sales and customer service teams are focussing on improving your LTV : CAC ratio, your business can collectively move towards sustainable long-term growth. 

With more loyal customers, creative marketing strategies and productive sales processes, aligned towards the common goal of increasing your LTV with the lowest spend possible, your business can only go from strength to strength.

So ensure the calculation of your LTV : CAC ratio is high on your priority list, so you can best understand how to optimise your strategies and get your business to the next level 🚀

No matter the efficacy of your paid social ads or email marketing campaigns, your website is the most important tool to turn interests into conversions for your business. 

That’s why it’s incredibly important to ensure that your website’s conversion rate is fully optimised. Whether your customer knows your brand from your organic social media presence, or has come across your website and brand for the first time, your website needs to provide a smooth and simple process from your customer visiting the landing page to completing their purchase.

Here are 3 ways you can boost your website conversions – all proven to optimise conversion rate.

1. Add a pop up to your landing page

Having a pop up form on your landing page is a great way to push visitors to make a purchase, by offering exclusive sign up discounts they can use on their first order. 

Along with increasing your conversion rate, this is a great way to capture people’s emails, mobile numbers or any other personal information you need. You can then use these for email and/or SMS marketing campaigns to increase AOV and engagement, and keep customers returning to purchase from you.

 

 

2. Show Customer Reviews and Social Proof

Showing customers reviews and social proof can act as a key element in increasing your conversion rate. 

Customers are now becoming more and more reliant on hearing what other people think of brands and products before purchasing. This is even more important if you are trying to acquire new customers who may have never heard of you before – you can quickly boost brand trust with a high quality review that directly addresses common pain points.

 

3. Keep Pages Easy To Navigate 

When a potential customer first lands on your website they should not feel overwhelmed by a busy website with a lot going on at once.

The landing page needs to be clear, simple and easy to navigate through. To minimise this you should always question what is going on your site and if it is needed and/or valuable to visitors.

This is just as important with product pages, especially if this is where you will be sending traffic from paid advertising.

When a customer lands on a product page they should easily and quickly be able to determine your product, its benefits, key information, price and even social proof/customer reviews with as little scrolling as possible. 

This can also be known as digital real estate on your page – optimising the given space correctly can have a drastic impact on conversion rates. Always think of minimising the amount of scrolling a potential customer has to do to find out everything about your product.

 

So, there you have it. A quick guide on 3 ways you can effectively improve your website’s conversion rate to maximise profits. 

If you need any further advice on how to improve your conversion rate or how to build an effective website, get in touch with our experts today 🚀

Autumn is officially here! And a new season calls for many changes to our favourite social media platforms. 

 Check out this month’s breakdown of what happened in September and what to expect in the the month of October on all relevant social media platforms. 

Instagram  

Instagram has remained relatively silent update-wise since its infamous Tiktok-style update back in the summer, which ultimately resulted in the app shifting back to its original layout due to the backlash. However, this has not stopped Instagram from focusing on video-based content in other avenues…

In a recent announcement, any videos uploaded/recorded via stories will no longer be split into 15-second segments and you will be able to record up to 60 seconds of content before the video is broken up. 

“Instagram’s been testing the update with selected users over the past year, as part of its broader process to integrate its video options, in line with the short-form video shift and general engagement trends.” (Source: Social Media today).

 

Tiktok

Tiktok has launched a new feature called Tiktok Now, which seems to be inspired by the

rising star Bereal. As featured in one of our previous blog posts – 5 Up & Coming Social Media Platforms, Bereal has seen a huge surge in popularity during 2022, being the self-proclaimed ‘authentic’ social media. 

 And if we’ve learnt one thing this year, 2022 is seemingly the year of social media copycats…

 

 

“TikTok Now invites you and your friends to capture what you’re doing at the moment using your device’s front and back camera,” the company’s blog reads. “You’ll receive a daily prompt to capture a 10-second video or a static photo to easily share what you’re up to.” (source: Social Media Today) 

 

Competitor apps, Snapchat and Instagram have also attempted to replicate the front and back camera which Bereal is renowned for, with rumours that Instagram is looking to create a ‘timer-specific’ feature itself. 

 

Facebook/Meta 

Facebook is testing out a new post option which would enable you to restrict access to your post to subscribers only for an initial period after publishing – be that 24 hours, 48 hours, or a week.

 

 

“Some users now have access to an ‘Early Access for Subscribers’ toggle in their post settings, which enables you to limit access to that post for a chosen period of time.” (source: Social Media Today). 

 This is being tested in efforts to increase the appeal for creators on the platform and give the spotlight to emerging stars looking to build a community via Meta. 

 

Twitter 

After years of waiting, the infamous update everyone’s been waiting for is finally in live testing. 

Twitter has confirmed that it has entered the first testing stage for its tweet editing feature. So far, the feature involves users receiving a notification stating that they will only have 30 minutes to amend their tweet once it is made live – with an extra icon added to any edited tweets. 

 

 

Users will be able to view the original tweet (even once edited) by clicking on the edit icon – a similar process to Facebook & Instagram comments. 

 

 

The topic of Twitter introducing an edit button has been a huge talk of debate for over 5 years, with many deeming the feature ‘dangerous’ and fearing being used in instances of hate speech and trolling – whereas many simply want a quick and easy way to amend their embarrassing spelling mistakes… 

 

And there you have it! What are your thoughts on these latest features and updates? 

Here at Social Nucleus, we have an expert team of dedicated Account Managers and Creative Executives who thrive in making your business’s social media presence as successful as possible, no matter the platform. Book a call with us today and find out more 🚀

When it comes to marketing communications, your brand’s tone of voice is one of the most important aspects to consider. It’s not just a tool used to appeal to potential customers. It’s an integral part of your business that conveys your values and makes your brand stand out to everyone from prospective partners to the rival brands you’re competing against.

In this blog, we’ll cover what a brand’s voice is and the reasons why establishing a strong one is so vital.

What is a Brand’s Tone of Voice?

Before we look at why this is such an important part of your marketing, let’s delve into what a tone of voice actually is. Put simply, your TOV is the way in which your brand conveys itself to the world, both written and spoken. It’s not necessarily about what you say, but more about how you say it and the impression this will have on your audience. To craft an effective, engaging tone of voice, you need to know who your audience is and what they want to see in a brand.

For example, a B2B brand operating in the engineering sector will target fellow professionals who know what they’re talking about. Colourful language, colloquialisms and other techniques you see in broader marketing won’t be applicable here. Instead, a mature, technical tone of voice is required, one that speaks the same language as those who are reading.

This encompasses everything you put out, both spoken, written and even visual content. Whether it’s Facebook ad copy or internal presentations, consistency is key. Your voice needs to be distinctive and present in order to increase brand establishment. Trying to be as broad as possible and change the tone of your marketing for different audiences could be a hindrance and set your brand development back significantly.

Why is Brand Tone of Voice so Important?

Personification

Imagine for a moment that the audience isn’t reading your copy on a phone or laptop, but that they are instead listening to a person. If there is no recognisable personality or consistency to what they are saying, do you think your audience is likely to trust them or take on the message being conveyed? No.

When you have a strong, recognisable voice, your audience will build a character and view messaging as a conversation, rather than a piece of standard advertising.

In short, it makes your brand more personable. People don’t want to feel like they’re just getting information relayed to them or, on the other end of the spectrum, that they’re being fed lots of unnecessary filler. By creating a distinctive tone of voice, you’re making it easier for them to relate to your brand and ultimately see themselves become a part of it.

Reliability

We have already touched on the idea of consistency. When building a tone of voice, you have the chance to bring stability to your brand’s messaging. If your audience sees conflicting messaging, then they will view your brand as fractured and lacking any identity.

However, if consumers can see a clear ‘theme’ in your messaging, then this will reassure them that you know what you’re talking about. The importance of consistency in the type of content, ad copy and the way it is delivered cannot be overstated.

Authority

The tone of voice doesn’t just help to make you appear reliable in the eyes of potential customers, it can also make you seem more authoritative. However, this requires both personality and deep knowledge of the subject or industry you’re working in.

When we talk about authority, this doesn’t necessarily mean bombarding your audience with a lot of jargon and technical talk. Instead, it’s about being confident in your messaging and having the intuition to know when and when not to use specific terminology.

Originality

This is quite basic, but it is still a hugely important part to consider. When you have a good tone of voice, it sets your brand apart from the rest. As we’ve already mentioned, it’s a great tool to help craft a unique identity, making both copy ad and content instantly recognisable as belonging to your brand.

This can be incredibly valuable, as once you have set a tone that connects with your consumer base, it means they’ll remember your brand. You won’t just be a random company in the field, instead, you’ll be a name they link to your industry. The important thing to remember is that, while you can of course take inspiration from competitors, you shouldn’t try to emulate them. You need to craft a truly unique voice that represents your brand.

Communication

Finally, and perhaps most importantly, tone of voice can massively improve your relationship with the audience and how you communicate to them. An effective tone of voice can cut through the endless sea of online content available, clearly conveying your message in a way other brands can’t.

It can also help focus your campaigns and marketing angles. Instead of coming up with loads of content and copy to test that might not produce results, you can follow a theme and slightly adjust what’s working. Don’t be afraid to turn away from the broad appeal, some of the most successful campaigns work because they operate in a niche.

Build a Better Voice with Social Nucleus

Knowing that tone of voice is important and being able to effectively craft one are two very different things. If you’re struggling to convey your brand in the best way through messaging, why not get help from the experts. At Social Nucleus, we work to establish a consistent tone of voice from the get-go that can be used in all aspects of your campaigns, from ad copy to email marketing and beyond. If you’d like to take your advertising to the next level, get in touch and start connecting with your audience now.