Posted on January 4, 2023  
by Noel Guilford

In yesterday’s challenge you calculated:

  1. How much it costs you to acquire a customer (CAC), and

  2. The average revenue you generate from all your customers across the entire customer lifetime (CLV).

Today’s challenge is to use those numbers to calculate the amount you need to spend on marketing next month to get the number of leads and customers you need to meet the sales target you set last week to achieve your desired level of profit.

The calculation is:

  • What is the lifetime value of a customer (CLV)?

  • How much can you afford to pay to get this customer(CAC) (A)?

  • How many leads do you need to get a customer (B)?

  • Therefore the amount you can spend to get a lead is …(C=A/B)

  • How many new customers do you want (D)?

  • So, the number of leads you need next month to get that number of customers (E= B x D)?

  • And the amount you need to spend on marketing for the next month to get the number of customers you need is …(C x E)

Here’s a handy spreadsheet for you to use to perform the calculation.

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Noel Guilford


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