As much as it is great to lower your costs of acquiring new clients (wouldn’t be great to get clients for free?), CPA won’t tell you much about how well your company is performing. If you have a low or high CPA doesn’t mean anything if you don’t have a reference point. Let’s say you are currently acquiring clients at USD100 cost. If you are charging your product USD200, you are making a gross profit of USD100. However, if you are charging USD20 per month, you will need to keep the client for at least five months to be break-even. CPA is not useful anymore. Now you need to measure the projected revenue for a new client (LTV.) The longer the client stays, the higher is the LTV. Regardless of the CPA, if your LTV is increasing is a good sign that you are doing an excellent job from the ad campaign all the way to delivering the goods. If you LTV is decreasing, is a good sign that you should review what’s happening beyond your ad campaign.


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Leo Celis