Sep 30 in General discussion
top 3 KPI’s in your business health
quick one today as I’m on the train taking my family to the senso-ji temple in asakusa.
these are the top 3 kpi’s you should be watching like a hawk in your business:
- ltv:cac ratio
• ltv (lifetime value) is how much money a customer brings you over time. you figure it out by dividing the average money a customer gives you each month by how many customers leave each month.
• cac (customer acquisition cost) is how much it costs to get a new customer. you get this by dividing your total marketing spend by the number of new customers.
• the ratio: you want your ltv to be 8 times higher than your cac. if it’s lower, you’re paying too much to get customers.
• takeaway: aim for at least an 8:1 ltv:cac ratio. if it’s lower, you might need to rethink your marketing or prices.
2. fecc (front-end cash collected)
• this is the money you collect right away when you get a new customer.
• you calculate it by dividing the front-end money by the cac.
• the ratio: aim for a 4:1 ratio, meaning for every dollar you spend to get a customer, you should get 4 dollars upfront.
• takeaway: with a 4:1 fecc:cac ratio, you’re not only covering costs but also making solid upfront money.
3. 30-40-30 rule
• this is a simple way to manage your business money:
• 30% of your revenue goes to paying your team.
• 40% covers other expenses like rent, marketing, and bills.
• 30% should be your profit.
• takeaway: this rule helps keep your business running smoothly and profitable.
you should be able to look in your current numbers and calculate these to identify any problems you have in your lead generation/client acquisition strategy.
love ya,
luis
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top 3 KPI’s in your business health
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