A note from Sary

If your average Lifetime Value is $2,000 over a five-year period, and the cost of value creation and value delivery is $500, that leaves you with $1,500 in revenue per customer served. Assuming vour Overhead expenses are $500,000 over the same five-year period and you have 500 cus-tomers, your Fixed Costs are $1,000 per customer, which leaves you with $500 in net income before marketing expenses. If you're shooting for a minimum 15 percent Profit Margin, you can afford to spend up to $200 per customer on marketing expenses ($500 - 0.15 x $2,000 = $200). If your assumptions are correct, any customer you can attract for $200 or less will be worth the invest-ment, giving you a clear budget for future marketing campaigns.

Sary The Personal MBA, page 190 · November 1, 2023 Save to shelf
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