Brands often ask their digital agencies what the industry norm is for cost per click (CPC), cost per lead (CPL) or even cost per acquisition (CPA), presuming that they’ll know whether their marketing is efficient and effective if their cost per engagement compares favourably to the average in their sector.

Leaving aside that the comparisons aren’t always meaningful because each business is unique, knowing that one company’s CPA is lower or higher than that of the competition doesn’t paint a complete picture of customer lifetime value (CLV). A brand could, for example, be achieving a low CPA but attracting customers who quickly churn to the competition, or are unprofitable to serve...