1. Do you think/know if that is pure marketing spend, or also direct sales & marketing related costs?
2. Is the payback period calculated based on the full LTV of the customer? Or do you cap it - our total LTV covers 12 years, so often we take the net present value. Curious to get your thoughts/feedback on this :).
1. Includes all sales and marketing, direct and indirect. Which I believe is the right way to calculate it
2. CAC payback period is relevant to however long it takes the customer to pay back the cost, so it’s not directly tied to LTV in that sense. It could be one year of LTV, it could be six. You’d have to look at LTV to CAC for the full picture. I generally disregard any LTV to CAC outputs above 10. A lot of companies aren’t even 10 years old 😂
Thanks! Two more questions if you don't mind :)
1. Do you think/know if that is pure marketing spend, or also direct sales & marketing related costs?
2. Is the payback period calculated based on the full LTV of the customer? Or do you cap it - our total LTV covers 12 years, so often we take the net present value. Curious to get your thoughts/feedback on this :).
Thanks a lot!!
Ps: always love reading your newsletters
Hi CJ, for the CAC payback period, is it in months? Thanks in advance :)
Yes months!
Your meme game is on 🔥, CJ!
Thank you for respecting my chosen art form
1. Includes all sales and marketing, direct and indirect. Which I believe is the right way to calculate it
2. CAC payback period is relevant to however long it takes the customer to pay back the cost, so it’s not directly tied to LTV in that sense. It could be one year of LTV, it could be six. You’d have to look at LTV to CAC for the full picture. I generally disregard any LTV to CAC outputs above 10. A lot of companies aren’t even 10 years old 😂
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