How to Choose Your First Marketing Channel

Pick your first marketing channel by calculating customer acquisition cost against lifetime value across 3-4 testable options.

1. Calculate your customer lifetime value baseline. Multiply average order value by purchase frequency by customer lifespan in months. If you sell $200 products with customers buying twice yearly for 3 years, your LTV is $1,200. This number sets your maximum allowable customer acquisition cost.
2. List 4 channels that reach your customer profile. Focus on channels where your customers actually spend time and have buying intent. B2B software buyers respond to LinkedIn ads and cold email. Local service customers find you through Google Local and Facebook. E-commerce works with Google Ads and TikTok.
3. Set test budgets of $500-2000 per channel. Allocate enough spend to generate meaningful data—typically 20-50 conversions minimum. If your average sale is $100, budget $1,000-2,500 per channel test. Run tests for 30-60 days to account for buying cycle variations.
4. Track cost per acquisition, not vanity metrics. Divide total channel spend by customers acquired to get CAC. Ignore clicks, impressions, or followers. If you spend $1,000 on Google Ads and acquire 8 customers, your CAC is $125. Compare this directly against your LTV.
5. Double down on channels with 3:1 LTV to CAC ratios. Profitable channels generate $3+ in lifetime value for every $1 in acquisition cost. Channels below 3:1 either need optimization or elimination. Scale the winner to 60-80% of your marketing budget before testing additional channels.