In customer relationships all the get keep grow metrics, some of which we talked about, some of which you'll discover, what were the customer acquistion costs?

Then as we talked about earlier, how much will it cost to acquire a customer?

If in fact, your conversion rate between acquisition activation could be increased.

If we now do the math, we can now see it cost me 100 to acquire one paying customer.

So one of the interesting equations for every startup is that

That was the customer acquisition cost, CAC, here.

Why would they do this? 'Cos they were going to lose 31 a year?

Seems intuitively obvious but what you want to make sure is the amount of money you're collecting over here is bigger than the customer acquisition cost to remember the amount of money you're spending from here to here.

Now if you remember we started here on the left. We didn't earn and paid media.

Well, hopefully it gets kind of fun because the real metric the way we kind of measure things, the language we use on the web is customer acquisition cost.

So what are some of the balancing acts?

If you have world's most perfect business model, investors would love to see this number much bigger than this number and so what you want to look for is a well balanced model that takes into account how much you need to acquire customers but how much ultimately you'll extract from them over the lifetime.

How much did it cost them to take a test drive of your car or fly your airline?

He has managed to secure several accounts.

Let's take a look at now the web mobile funnel.

look like. What is it that you are doing.

Well getting customers is just like it sounds.

And referrals basically generates this outer viral loop.

They think they'll be able to rent it five times during the year but their shipping cost was about 9, their cleaning cost a dollar processing cost a dollar and their customer acquisition and activation cost 25 a team and so if you take a look at their unit costs you add all this up it's 230 but their revenue was only 199.

So in our last lectures we talked about value proposition, customer segments, distribution channels, customer relationships get, keeping and growing customers.

He might have only used it two or three or four times. and you don't have the customer acquisition cost because you already acquired that customer.

I want to know what the driver is.

If you could do in physical channels, telesales or inside sales versus having a direct sales force,

Hopefully in the last lecture you start thinking about the cost of you channel how many customer activations, how much it will cost to get customers into my physical store or my virtual website.

First one is we got to acquire customers and then we activate them.

Well, in the customer acquisition cost, if all of a sudden, you could get a viral loop going, well, that decreases your cost of acquisition.

And again, are you getting a viral loop and referral loop from happy and satisfied customers telling others word of mouth and so this is a balancing game, and for first time entrepreneurs who are focused here, it's really important to think about customer acquisition cost and a lifetime value.

The answers are get, keep, and grow are the three parts of customer relationships.

And so let's look at both of these get, keep and grow for physical and web mobile channels in a little more detail.

I want to use and on the web, I might be paying Google forever.

Let's do an exercise and see what it feels like and how does it work to get an activated customer and how much it cost.

And so they figure out how to sell existing customers more products.

Assume 3.7 of these 4,025 customers actually converted from acquired customers to activated customers, so the question for this quiz is calculate what was the customer acquisition cost per customer.

Today, we're going to be talking about customer relationships.

Keep just like it sounds.

Why do you want to think about keeping customers is that customers are a lot more expensive to acquire over here than they are to keep.

But for you to be a successful company and actually thinking about how much you could spend on them over here, you need to understand can I get them to spend more and more over time and how to keep them

What are the costs of jerseys and warehousing and shipping and cleaning,

If we multiply that out, we'll discover that equals about 149 activated customers, and now if we divide the 3,018 by these 149 activated customers, we find out that the customer acquisition cost, the CAC, equals about 20, more precisely about 20.27.

Even though on day 1 you're not thinking about keeping customers because you're desperately worried about getting them, just understand the next thing you're going to be doing is worrying about how to keep your most valuable customer.

Lifetime value is the customer lifetime value from beginning to end, and just as a note, remember customer acquisition costs acquired over here, needs to be less than customer lifetime value.

What you need to do is have an opinion based on some fact that gets refined.

We talked about value proposition, we talked about customer segments, we talked about channels, but today we're going to focus on customer relationships.

A start up is a temporary organization and what are you suppose to be doing?

Customer relationships is kind of a fourth piece, and customer relationship has a really interesting interaction with these other three pieces.