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This worksheet is designed to help you assess what kind of investment to make in your marketing campaigns.

Step 1: Calculate Lifetime Value of a Customer

• What is the average order value for a new customer?
• What is the average repeat purchase rate?
• What is the average retention period before churn?
• Multiply these together to get lifetime value of a customer

Step 2: Calculate Customer Acquisition Cost

• What are your costs per lead across each marketing channel?
• What is your average conversion rate from leads to customers?
• Divide cost per lead by conversion rate to get cost per acquired customer

Step 3: Compare LTV to CAC

• Is your lifetime value per customer higher than your cost to acquire them? By how much?
• If not, how can you increase average order value or retention period?

Step 4: Identify Virtuous Cycles

• How can you turn one-time customers into loyal fans who refer others?
• What programs can incentivize referrals, reviews, repeat purchases, upsells, cross-sells, etc?

Step 5: Reinvest for Growth

• What percent of profits will you reinvest into marketing and growth initiatives?
• Which growth levers provide the best return on investment?