LTV & price per acquisition

How much revenue will your average user/ buyer generate during their lifetime? Let's go over an example: If you had a sandwich shop and your customers are usually university students, they spend between $9 and $20, but the average is $10 per visit. You also know that the average student buys a sandwich 2 times a week. The average customer value per week will be $20. ($80 a month) Now you need to know the average lifespan (how long will someone remain your customer) In this case, we know that university students will be around for 4 years. Over this period of time, new restaurants, coffee shops, and other alternatives will open in the area and you will lose some of the customers. Maybe for you, a realistic retention rate will be 50% You will also need to consider the profit margin per customer. Let's say your margin is 25%, so $2.5 A simple way to calculate your LTV will be: ($80 x 12 months) x 4 years. The problem with this is that you are not keeping in mind your retention rate or your margins. So let's get it right by opening the board and visually calculating your LTV.

Share the results here.

What is your current acquisition cost per customer? Is your LTV at least 3 times higher? If not, how are you planning to reduce the acquisition cost? Share your ideas here.

Which are the key underlying factors reducing your customer lifetime value? What could you do increase it? Share your ideas here.

The difference between an average customer and a good customer could be important and could also be a new window of opportunities. First, evaluate the difference between the LTV of an average customer and the LTV of a good customer. The difference could be $2000 or more. What's yours? Secondly, spend 10 to 15 minutes thinking about the additional things you could do to increase the number of good customers or transform the average customer into a good customer. This could be a customer success activity, a new feature, an additional service, or even a promotion to increase customer satisfaction. Write your strategy below.