[davedx]

Interesting...

> "...a customer acquisition cost way above one-third of customer lifetime value"

Is this really so terrible? As I understand it a lot of mobile games pay more for acquisition than they'll make from the user in e.g. IAP's to scale up their player base and climb the charts. What is a normal CPA vs LTV in the SaaS space?

Also, if you pay less to acquire these customers than you will make from them over time, you haven't quite wasted 50k have you?

[nrjames]

Climbing the charts with a mobile game has the potential for activating a virtuous cycle with eCPMs for advertising as a parallel benefit to player acquisition. The acquisition and eCPMs can feed the cycle and self-sustain for a while. That's how the Voodoo and Ketchapp's of the world create their arbitrage markets that keep their throwaway hyper casual games dominant in the top of the charts. They've effectively gamed and broken the charts that way, reaping enormous benefits.

[GarrisonPrime]

It depends on the industry. In retail, for instance, a customer acquisition cost of more than 10% their expected lifetime value is unsustainably expensive. Is suspect retail having only 5-8% profit margin is part of that though.

[ealexhudson]

I guess the issue here is that your current LTV may not match the LTV of this cohort of customers, and the closer the CAC for this cohort gets to your LTV, the more you risk that actually there isn't margin there?

[smoyer]

I saw that and assumed that the $50k wasn't actually wasted ... they just ended up with a cohort of customers that wasn't as profitable (unless of course the cost of maintaining those customers exceeds the other 2/3rds of their LTV).

[jpking]

In addition this is potentially a good sign for optimisation of both CAC (better quality marketing) and LTV (better quality product).