Customer Lifetime Value Calculation | Matt Astifan
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Customer Lifetime Value Calculation | Matt Astifan

What is your customer
lifetime value? So you want to look at all your
revenue at least a year, if you haven’t been in
business a year, you gotta kind of have to
project. Most lifetime values projected
typically over two years, the average. So how much
revenue did He create? And how many total number
of customers? Right. And that’s how you can find
your lifetime value, because most people will
buy from you more than once. In many businesses,
if you have a product or service that someone’s
going to buy from you once and then that’s it.
A lot of businesses that I’ve seen like that are
either not very profitable at all, I have
a very hard time with advertising, right? I’ve
actually met a lot of companies that are
physical products, they only have one, someone
buys it, they enjoy it. And that’s it, the
customer relationship is over. Right? And then
they can’t scale their business, they can’t grow
their business, you need to be able to offer more
your best customers or your past customers,
right. So you also want to consider the lifetime
value. So not just How much you willing to spend
to acquire the customer? But how much will they
spend with you over the next year or two years? I
remember one time meeting with a company that was,
it was a skincare company, anyone here in
skincare? Yeah, few people. The Skincare
company that had a cream, I won’t say what it was
for just for confidentially, but it
was a cream that cured a very specific problem.
And they were giving away free samples on Facebook.
Every time they gave away sample, I believe it cost
them it’s like I want to say was like $12 Okay, it
costs the money to advertise to give away
and then their average to give it away with
advertising. Everything was like, it was like
under 20 bucks. I know. And they spent 10s of
thousands of dollars to give away these products.
And within six months there I think their ROI
was something like $220,000 right? But they
invested so much and just acquiring the customers,
right and because they knew that they were going
to love the product and they would keep on buying
it and it was a type of lotion for a specific
problem that they would require buying it for
several years wasn’t it wasn’t something that was
would be cured. It was something that they will
continue buying, right? So they were looking at
the lifetime value, they ended up actually
securing an investor for their company, because
they found the formula that work. They said, Now
we just need the money to be able to give away the
samples because we just did it. We did a small
test. He was a projection, here’s what
how much money we made. And now we want to scale
it right. So they end up getting an investor that
grew the company. It’s a fairly large company now.

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