Calculation Questions, Answered
Average Retention Cost = Retention Spending ($) / Number of Customers Retained (#) This formula helps businesses determine how much money they spend to keep their customers. To find the average retention cost, you divide the amount of money spent on keeping customers by the number of customers that are still with the company. This …
Break-Even Acquisition Rate = Acquisition Spending / (Initial Margin + CLV) * 100 The Break-Even Acquisition Rate is a way for businesses to figure out how many customers they need to make a profit. It looks at how much money they spend on getting new customers (like advertising and promotions) compared to the amount of …
Prospect Lifetime Value = Acquisition Rate (%) * [Initial Margin ($) + CLV ($)] – Acquisition Spending ($) This equation is used in business or marketing to determine a potential customer’s value over their lifetime. It considers how likely it is for the company to get new customers and how much money they spend on …
Customer Lifetime Value = Margin ($) * (Retention Rate (%) / (1 + Discount Rate (%) – Retention Rate (%)) Customer Lifetime Value is a way to determine how much money a company makes from one customer over their entire relationship. It considers how much profit the company gets per sale, how likely the customer …