User Acquisition Cost – How do you calculate it? How do I know how much each app user is worth to your business?

Can you imagine your life without the apps you use daily? It seems that the app age has been a part of our lives forever, but as a matter of fact, it only started a little over a decade ago. While the app age has definitely matured, it’s still growing and evolving constantly. The app age has allowed us to access a variety of services and information quickly and easily and has given us greater control over our lives. As this trend continues, it is likely that the app age will continue to shape our lives in increasingly dramatic ways.

If you own an app, it doesn’t matter the vertical or size, you are constantly on the lookout to keep your app growing its user base which in turn will grow your revenue and profits. To achieve this, you constantly need to invest in marketing and in your app promotion. This is like trying to fill a bucket with water – you have to continuously pour water into it to keep it from emptying out. Similarly, in order to keep an app’s user base growing, you have to continually invest in marketing and promotion to maintain the momentum.

But how do you know if all that promotion and hard work of attracting new users is paying off?

User Acquisition Cost (UAC) is a critical metric that measures how much a business spends to attract new customers. It is an essential parameter to track for businesses of all sizes, especially for startups that are still trying to establish themselves in the market. In this blog post, we will discuss how to calculate UAC and how to determine the value of each signup to your business.

Calculating User Acquisition Cost

The formula for calculating UAC is simple. It is the total amount spent on marketing and sales divided by the number of new customers acquired during that period. For example, if you spent $10,000 on marketing and sales in a month and acquired 100 new customers, your UAC would be $100.

However, it is important to note that UAC should not be looked at in isolation. It should be compared to the lifetime value of a customer (LTV) to determine if the cost of acquiring a customer is worth it. If the UAC is higher than the LTV, the business is losing money. On the other hand, if the LTV is higher than the UAC, the business is profitable.

Determining the Value of Each Signup to Your Business

To determine the value of each signup, you need to calculate the average revenue generated per customer. For example, if your business generates $100,000 in revenue from 1,000 customers, the average revenue per customer is $100. Therefore, each signup is worth $100 to your business.

However, it is important to note that not all customers are created equal. Some may generate more revenue than others, so it is essential to segment your customers to get a better understanding of their value to your business. For example, customers who make repeat purchases or refer other customers are more valuable than those who make a one-time purchase.

Why are all these calculations important? Because once you know how much each user is worth, you’ll know how much you can invest in your app growth. Also, when you invest your time segmenting your audience, users, and high-profile or returning users, you’ll know where to invest more in your marketing efforts. The more you know about your users, the better you can target your efforts. This can help to maximize your return on investment and ensure you get the most out of your marketing budget.

Lifetime Value (LTV) is the total revenue that a customer will generate over their lifetime using your app. LTV solves the problem by telling you how much value a newly acquired user brings to your app – and by extension, gives you a cap for how much you should spend on acquisition costs. Mobile app LTV should be the primary barometer for your mobile marketing budget because it effectively assigns weight to each and every user (or a user average).

How to use LTV to optimize your app marketing strategy and budget allocation?

To optimize your LTV, you need to consider three factors: average purchase value, number of purchases, and retention period. Average purchase value is how much a user spends on your app each time they make a purchase. The number of purchases is how often a user buys something from your app. The retention period is how long a user stays with your app before they stop using it.

To increase your average purchase value, you can use strategies such as upselling, cross-selling, bundling, or offering discounts and incentives. To increase your number of purchases, you can use strategies such as personalization, loyalty programs, referrals, or push notifications. To increase your retention period, you can use strategies such as improving your app’s user experience, providing value-added content or features, or re-engaging users who are at risk of churning.

By measuring and improving these three factors, you can optimize your LTV and allocate your marketing budget more efficiently. You can also use LTV to compare different user segments, channels, platforms, or markets and identify the most profitable ones for your app.

The Return on Ad Spend (ROAS) is a marketing metric that measures how much revenue you earn for each dollar spent on advertising. To calculate ROAS, divide the revenue generated from an ad campaign by the cost of that campaign.

Conclusion

In conclusion, UAC, LTV and ROI are essential metrics to track for any business. By calculating UAC and comparing it to LTV, businesses can determine if their marketing and sales efforts are profitable. By determining the value of each signup, businesses can better understand the revenue potential of their customer base.

If you’re looking to grow and maximize your budget in the best way possible, contact us today.
With the variety of solutions we have for advertising and performance campaigns, you only pay for the results you’re after. We Maximize your budget the best way possible to meet your KPIs.

E-commerce is constantly changing. To keep up with trends and evolving consumer demands and to stay ahead of the game, business owners need to keep a close eye on these industry trends.
During the pandemic, social distancing and other preventative measures meant that consumer requirements shifted, and many aspects of e-commerce were changed. Some changes were temporary, while others are here to stay.
With a number of significant e-commerce events around the corner this November, it’s time to look at the post-pandemic trends that continue to shape e-commerce in 2022.

But before we dive into the strategies you can use to advance your e-commerce business, let’s take a look at a tool that can help your business stand out from the rest. Skipper by Zoomd is designed to help you increase your growth trajectory. Paid User Acquisition? With Skipper, you can run multiple user acquisition campaigns across various platforms concurrently through a single dashboard.

E-Commerce Challenges and Trends

Let’s take a look at some of the trends and solutions you can incorporate into your strategies for the remainder of 2022:

• Navigating a newly competitive market

During the pandemic, the e-commerce industry experienced a sudden spurt of unexpected growth. Studies projected that this trend would likely continue, predicting that by the end of 2022, e-commerce will account for 20.4% of global retail sales. This is over a 10% increase from just five years ago. The e-commerce industry’s rapid growth brings with it the challenges of new competition, but it also creates opportunities for new customers. To navigate this challenge, it’s essential to create a unique brand voice and identity that sets you apart from the competition and introduces you to new customers. The ideal way to do this is to maintain consistent customer acquisition campaigns while diversifying your target platforms. While this may be challenging, tools like Skipper can simplify the process and make it easier to manage campaigns on multiple platforms concurrently. 

• Advertising campaigns grow more sophisticated 

With so many new actors in the market, a major part of e-commerce marketing is the race to gain new customers’ attention. This means that organizations are willing to invest large sums in advertising. But, due to the overwhelming amount of marketing materials customers are exposed to daily, advertising has become less effective. As a result, advertising costs rise, and campaign effectiveness sinks as customers become inundated with generic advertising. The solution? Focus on quality over quantity. Rather than throwing generic user acquisition materials at your customers, turn your efforts toward creating unique campaigns that can set you apart. Additionally, target multiple platforms at once, so you can reach potential customers wherever they browse.  

Utilizing tools such as Skipper leaves you free to focus on creating strategies while we take care of the maintenance, diversification, and optimization. 

• Expanding to new vistas 

While the market achieved new growth during the pandemic, in many ways, the world shrank, and organizations that don’t support customers internationally are becoming an exception rather than a rule. Although expanding to new markets requires funding and conducting customer acquisition campaigns with a whole new customer base, breaking into new markets can create new opportunities for your business. As a small business, you can focus on local expansion by extending your customer acquisition campaigns to new platforms and taking advantage of new pools of potential customers.   

Moving Ahead With Skipper 

Keeping track of your campaigns can be challenging, especially when you’re running multiple campaigns across multiple platforms. Our platform makes this process a breeze by collecting all the data you need to set up, optimize, track, and maintain campaigns into a single dashboard. Skipper supports all of the most popular social media platforms and is integrated with 16 channels, including Facebook, Instagram, Google Ads, TikTok, Apple Search, Twitter, Snapchat and more. 

By allowing you to keep track of all your campaigns concurrently, Skipper gives you control over your user acquisition activities, allowing you to grow your business fast. 

Now that the e-commerce industry has undergone a major evolution, new challenges and opportunities make it the perfect time to refresh your customer acquisition campaigns and ensure they’re all optimized. Skipper allows you to expand your campaigns to meet the industry’s growing demands and helps you take advantage of new opportunities as they arise. We’re always adding new features to address our customers’ changing needs, making it easy for you to keep up with the trends. Our goal is to help your business reach its potential, so before the busy e-commerce month of November kicks in, check out our platform to learn how we can help you grow with your industry.