Have you heard the question “what’s your LTV/CAC ratio” and wondered – what the ? I’m just trying to build a business here!You may have thought to yourself “ruh roh – I have no idea what that means!Don't worry! I share with you what these acronyms mean, why they’re necessary for your business, and how to calculate them. As a founder, you have to lift “know your numbers” weights. It’s part of your hands-on training, and the LTV/CAC ratio is a valuable calculation to help you create a successful outcome for your business.Why? Because it reveals your marketing return on investment (ROI)In other words – it lets you know if you’re throwing money away on your business or if you’re investing your marketing dollars wisely.If you’re raising capital or applying for a line of credit, you’ll need to know this number.This is an audio from my Andelicious Advice YouTube channel: https://www.youtube.com/user/AndeliciousAdviceBelow is the example I promised for a practice calculation. Have fun and let me know if you have any questions - cheers!Ande 💙EXAMPLE CALCULATION:Let’s say your business’s revenue for one year was $100,000. During the period, you had 400 unique customers who made a total of 500 purchases. Your average customer lifespan is 10 years.First, calculate your average purchase value by dividing your annual revenue by your total purchases:Average Purchase Value = $100,000 / 500Average Purchase Value = $200.00Next, calculate your average purchase frequency by dividing 500 purchases by 400 unique customers.Average Purchase Frequency = 500 / 400Average Purchase Frequency = 1.25Finally, plug in your numbers into the customer lifetime value formula:CLV = (Average Purchase Value – Average Purchase Frequency) X Average Customer LifespanCLV = ($200.00 – 1.25) X 10CLV = $1,987.50Your average customer will spend $1,987.50 at your business over the course of their relationship with your company.******SUBSCRIBE TO LET'S STICK TOGETHER NEWSLETTER:http://bit.ly/AndeliciousNewsletterDIY STARTUP FOUNDER PRODUCTS:http://bit.ly/FOUNDERDIYPITCH DECK AUDIThttp://bit.ly/PitchDeckAuditCONNECT WITH ME ONLINE:http://andelyons.comhttps://twitter.com/AndeLyonshttps://www.facebook.com/PossibilityP...https://www.linkedin.com/in/andelyons/https://www.instagram.com/ande_lyons/https://www.pinterest.com/andelyons/https://angel.co/andelyons

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