Part 1 - The 5 Step Formula to Determine Your nCAC
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Jan 28, 2025
Discover the importance of New Customer Acquisition Cost (NCAC) as a key metric for business growth. Learn how to measure it effectively without getting lost in vanity metrics. Unpack the complexities of customer segmentation and its impact on digital advertising. Dive into the five-step formula for calculating Customer Lifetime Value (LTV) and why it matters for your strategy. Lastly, grasp the hidden costs that come with acquiring new customers and how to ensure profitability while optimizing marketing efforts.
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Focus on NCAC
Focus on NCAC (New Customer Acquisition Cost) in digital marketing.
Platforms often prioritize ROAS, but NCAC measures true business growth.
insights INSIGHT
Determining NCAC is Complex
Determining NCAC is complex, unlike calculating it retrospectively.
It involves understanding your business, desired growth, and acceptable costs.
volunteer_activism ADVICE
NCAC Calculation Basics
Calculating NCAC involves basic addition and subtraction.
Business owners must decide how much they can afford to acquire a customer.
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In part one of this two-part episode, Ralph and Lauren are talking about New Customer Acquisition Cost (NCAC). Sure, the mention of math might send some of you running for the hills, but hold on—this is the math that matters. Ralph compares finding your NCAC to searching for buried treasure, while Lauren reminds us that chasing vanity metrics like ROAS alone is as useful as an umbrella in a hurricane.
Learn why NCAC is the North Star of scaling a business, how to measure it effectively, and what tools can make the process manageable. Ad platforms love to boast about their results but your bottom line—and how much it costs to add a new customer to it—never lies.
As Lauren puts it: “Fake numbers might make you feel good, but they won’t pay your bills.”
Chapters:
00:00:00 – Math That Matters: The Secret Ingredient for Scaling
00:00:24 – NCAC: The Metric That’s Cooler Than ROAS
00:01:42 – Why Calculating NCAC Feels Like Cracking a Cold Case
00:02:42 – Scaling Secrets: Unlocking Business Growth with Math
00:03:47 – The Real Cost of New Customers (No, It’s Not What You Think)
00:06:10 – Lifetime Value: Measuring Love from Your Best Customers
00:09:28 – Practical Math: When Numbers Lead to Dollars
00:12:45 – Refunds, Returns & Regrets: Subtracting the Pain Points
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