2. Relationship with LTV Unit economics are closely related mozambique email list 150000 contact leads to CAC and LTV, as calculated as LTV/CAC. LTV is an abbreviation for Life Time Value, which means the lifetime value of a customer. It is a figure that shows how much profit a customer will bring in the period from when they sign a contract to when they terminate the contract. LTV can be calculated using the following formula: LTV = average purchase price x average purchase frequency (times/year) x average duration (years) If you add CAC (customer acquisition cost) to the LTV calculation formula, you get the following formula.
LTV = (average purchase cost - customer acquisition cost) x average purchase frequency x average retention period In other words, if CAC exceeds LTV, the business is deemed unhealthy. It is in a situation where a loss is incurred every time a customer is acquired. It is said that if LTV is more than three times CAC, the business is profitable, so be aware of this number. [4] How to use CAC Here are some ways to use CAC: Set each item (measurement period, cost, customer breakdown) Understand how much you spend to acquire customers Understand the number of new customers acquired Calculate CAC Compare with LTV Here we will explain each step in detail.
