Startups and the Cost of Customer Acquisition
In many articles that provide tips to building successful startups, a lot has been written about three key factors: The caliber of a startup team, quality of a startup’s product and size of a startup’s market. Many entrepreneurs believe that the only thing that matters when it comes to startup success is getting a right team/product/market fit. But an important point most startups forget is the cost of customer acquisition. In fact a lot of startups solve the product/market fit problem, but fail because they don’t find a way to acquire customers at a low enough cost.
It is also important to ask yourself the question: can my business realistically expect to acquire customers for considerably less than the amount that I can monetize them?
The service/product your startup is providing may be extremely interesting and compelling. However, if your business doesn’t pay attention on how much will it cost to acquire customers, your startup success dream, perhaps, will just remain a dream.
The article mentioned below gives a detailed explanation on how to calculate the cost of acquiring customers and comparing it with the lifetime value of a customer (LVC) to find out if your startup can really succeed:
http://www.forentrepreneurs.com/startup-killer/
The article is a great resource for startups.
…market size- yes, but here is a 4 rth factor - how exactly you are going about gaining your market share - strategic plan and tactical execution.