The Analytics Power Hour #272: When the Metric is Calculated and Complex with Dan McCarthy
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May 27, 2025 Dan McCarthy, Associate Professor of Marketing at the University of Maryland, unpacks the intricate world of customer metrics. He highlights the challenges in defining metrics like Customer Acquisition Cost (CAC) and Customer Lifetime Value (CLV). The conversation reveals how multiple interpretations can lead to financial misrepresentations and regulatory hurdles. McCarthy also discusses the importance of clarity in corporate disclosures, the influence of leadership on corporate governance, and how emerging AI perceptions complicate metric calculations. A must-listen for metrics enthusiasts!
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CAC Definitions Vary Widely
- Customer acquisition cost (CAC) definitions can vary wildly and companies often manipulate them for better appearances.
- Definitions impact investor perception and can fluctuate heavily based on what costs and customer counts are included.
Fraud from Fake User Counts
- Charlie Javis committed outright fraud by inflating his user numbers with fake accounts.
- Without clear definitions, companies can evade accountability over misleading metrics.
Churn Rate Is Misleading
- Churn rate is misleading as it naturally declines over time as older customers remain.
- Declining churn doesn't necessarily signal improvement but cohort dynamics.
