Unlock Explosive Growth: The Ultimate LTV/CAC Calculation Template 📈
Master the art of profitable customer acquisition with this incredible financial tool 🚀
👋 Hey, Linas here! Welcome to another special issue of my daily newsletter. Each day, I focus on 3 stories that are making a difference in the financial technology space. Coupled with things worth watching & the most important money movements, it’s the only newsletter you need for all things when Finance meets Tech. If you’re reading this for the first time, it’s a brilliant opportunity to join a community of 344k+ FinTech leaders:
How do FinTech powerhouses like Nubank and Revolut scale sustainably, dominate markets, and keep investors thrilled? It boils down to one financial formula every successful business must master - the balance between Customer Acquisition Cost (CAC) and Customer Lifetime Value (LTV).
If you've ever questioned whether your marketing spend translates into genuine profits, you're not alone. Most businesses grapple with uncertainty, pouring money into customer acquisition without fully understanding their return.
But here's the truth:
Mastering your LTV-to-CAC ratio is the key to predictable and explosive business growth. That’s why today I’m sharing this brilliant LTV/CAC Calculation Template I recently came across. It’s a vital tool designed to provide clear insights into customer profitability and marketing efficiency.
But first, a quick refresher ♻️
CAC measures the cost involved in acquiring new customers. It is calculated as the total amount spent on acquisition efforts divided by the number of customers acquired. In other words, how much is being invested in marketing for each new customer?
LTV reflects the projected profits from a customer throughout their relationship with your company. It’s calculated as (average revenue per customer - CAC - customer service cost) divided by (churn rate + discount rate). In other words, what is the estimated profit from each customer over time?
The ratio between the two tells you whether your current customer base is profitable or not.
This intuitive LTV/CAC template thus includes the following:
Time series analysis
Detailed marketing expense tracking
New customer acquisition metrics
Monthly revenue insights
Precise churn analysis
Plus, you will unlock full access to The Ultimate Toolkit for Cashflow Forecasting & Financial Health Monitoring; KPI Dashboards That Supercharge Your Decision Making; The Ultimate Finance Toolkit Every CEO Must Have, and more!
Stop guessing. Start growing, all while steering your company towards greater financial health. Let’s dive in: