What are some examples of CLV and CAC calculations?

What are CLV and CAC, and how do I calculate them?

CLV stands for Customer Lifetime Value, and CAC is Customer Acquisition Cost. CLV is the total revenue expected from a customer over their lifetime, while CAC is the cost to acquire that customer. To calculate CLV, you can use the formula: CLV = (Average Purchase Value x Purchase Frequency) x Customer Lifespan. For CAC, it's calculated as: CAC = Total Marketing Expenses / Number of New Customers.

Can you give me an example of how to calculate CLV?

Sure! Let's say your average purchase value is $100, and a customer makes 2 purchases per year for 5 years. The CLV would be: (100 x 2) x 5 = $1000.

What about an example for CAC?

Absolutely! If you spent $5000 on marketing in a month and acquired 100 new customers, your CAC would be: 5000 / 100 = $50 per customer.

How can I improve my CLV and reduce my CAC?

To improve CLV, focus on customer retention strategies like loyalty programs and personalized marketing. To reduce CAC, optimize your marketing channels and improve your sales funnel.