How do you lower customer acquisition cost and churn with product metrics?

2 Why are CAC and churn important?

CAC and churn are important because they affect your customer lifetime value (LTV), which is the total amount of revenue you expect to generate from a customer over their relationship with your product. Ideally, you want your LTV to be higher than your CAC, meaning that you are making more money from your customers than you are spending to acquire them. A high CAC or a high churn rate can lower your LTV and reduce your profitability and growth potential.

3 How to measure CAC and churn

To measure your CAC, you need to divide your total acquisition costs by the number of new customers you acquired within a specific period. For example, if you spent $10,000 on marketing and sales in a month, and you gained 100 new customers, your CAC would be $100 per customer. To measure your churn rate, you need to divide the number of customers who left your product by the total number of customers you had at the beginning of a period. For example, if you had 1,000 customers at the start of a month, and 50 of them churned, your churn rate would be 5%.

4 How to lower CAC with product metrics

One way to lower your CAC is to improve your product quality and usability, so that your customers have a positive and seamless experience with your product. You can use product metrics such as user feedback, satisfaction scores, error rates, and usability tests to identify and fix any issues or gaps in your product functionality, design, or performance. By enhancing your product quality and usability, you can increase your conversion rates, reduce your customer support costs, and boost your word-of-mouth referrals, all of which can lower your CAC.

5 How to lower churn with product metrics

Another way to lower your churn rate is to increase your customer engagement and retention, so that your customers find value and benefit from using your product regularly. You can use product metrics such as usage frequency, retention rate, feature adoption, and engagement score to track and analyze how your customers interact with your product, what features they use or ignore, and how loyal they are to your product. When you understand customer behavior and preferences, you can tailor your product features to meet their needs and encourage them to stay with your product longer.