When advertising, is it generally acceptable to have a CPA > LTV of a customer during a growth phase?
When advertising, is it generally acceptable to have a CPA > LTV of a customer during a growth phase? I understand it's not good for a long term advertising strategy but for growth, is it acceptable to spend more to acquire a customer than earn back from them in a lifetime? Thanks.
In general I would recommend against it.
It's a different story if CPA > first order revenue but CPA < LTV (with margins taken into account too). I worked for a company where we were thrilled to lose money on new customers every day, as we knew that with repeat orders, in three months we were going to be in the black.
Perhaps two exceptions could be if your product is extremely viral and/or strongly needs a network effect to get traction, meaning you just need to prime the pump so that fairly soon you are making money.