Analyse Net Contribution

Acquisition > Contribution profit

Summary

This report shows how much profit or loss you are generating from your ad campaigns after considering the customer acquisition costs (CAC) and customer lifetime value (LTV) helping you determine the profitability of your acquisition efforts over time.

Questions the report answers

• Are you spending efficiently on customer acquisition?
• Is the acquisition cost justified by the lifetime value of the customers?

How to read the report

Evaluate Profitability Using Net Contribution

• If the Net Contribution per Customer is positive, it means that the revenue generated by the customer (LTV) exceeds the cost of acquiring that customer (CAC). This indicates that the campaign is profitable, and you should consider scaling these acquisition efforts.
• If the Net Contribution per Customer is negative, it indicates that you're spending more to acquire the customer. This suggests that you need to either reduce your CAC or focus on increasing the customer’s LTV.

Track metric trends

Customer Acquisition Cost and Lifetime Value per Customer over Time graph allows you to track how these metrics change over the selected period. If CAC remains relatively stable but LTV increases, it suggests that your customers are becoming more valuable over time, which is a positive sign for long-term business growth. If CAC is higher than the LTV indicates that you're spending more to acquire the customer.

Glossary

Digital Ad Spend

The total spend on advertisements across all advertising platforms. It is calculated by summing the costs associated with each ad platform.

Customer Acquisition Cost (CAC)

The cost associated with acquiring a new customer through advertising efforts. It is calculated by dividing the total ad cost by the number of new customers.

New Customers

The total number of customers who have made their first purchase.

Net Contribution per Customer

The financial value that each customer contributes to the business after accounting for the costs associated with acquiring them. It is calculated by subtracting Customer Acquisition Cost (CAC) from Lifetime Value (LTV) per Customer.

Lifetime Value per Customer

The average lifetime value per customer. It is calculated by dividing the total order value by the total number of customers.