Customerin the period. Calculated using direct
Sales/Marketing Staff Costsin the appropriate period.
Marketing Spendin Jan 22 and then $2m in Feb 22 and Mar 22.
Marketing Spendtakes 2 months to flow down the funnel and convert to
Customers. In Mar 22 there are 4
New Customers, therefore
CACin Mar 22 should be $1m/4 = $250k rather than using the
Marketing Spendin Mar 22, which would result in $2m/4 = $500k, as this is not the relevant amount which determines the
New Customersgained in the period.
Payroll Cost for Sales and Marketing Staffwe can produce a formula like the image below. The formula takes
Payroll Costs for the Sales and Marketing
Departmentmodified by the amount of
Timespent in the funnel. This is then divided by the the
New Customers in the Periodto arrive at the
Customerto produce enough
Gross Profitto pay back their respective
CAC. The shorter the
Payback Periodthe better your business is performing!
CAC(See above) you can calculate your payback by finding your
ARPU(Average Revenue per Account) and multiplying this by your
Gross Profit Margin. to find the contribution per
CACand dividing by this
Contributioncalculates how many periods are required for the
Customerto payback their
Annual Contract Value/
Customer Acquisition Costgives indication of profitability on new contracts. After calculating
CAC(See above), take the
Annual Contract Valuein the period and divide by
CACin the period to produce this metric!
Sales and Marketingspend are in a specific time period.
Net New ARRor
New ARR + Expansion ARR - Churned ARRand dividing it by
Sales and Marketing, focus should be elsewhere.
Sales and Marketingexpense and depends on the specific context of your business.
Sales and Marketing. You likely have a proven product-market fit and solid CAC payback periods and this is the time to take advantage!
New Customers. The higher your
LTVby taking (
Average Order Size in the Period*
Average # of Orders in the Period*
Contract Length) /
Churn Rate. This gives
LTVfor an average
Customerin the cohort!
Cashis being used to generate new business and is used as a guide on sustainability of the current business model. The higher the Burn Multiple, the more the start-up is burning to achieve each unit of growth. The lower the Burn Multiple, the more efficient the growth is.
-Net Operating Cashflowdivided by
Net New ARRor (
New ARR + Expansion ARR - Churned ARR).
Upsellingon the business.
Beginning ARR - Churned ARR + Expansion ARR) /
Start of the Periodremain at the
End of the Period.
Total Customers at End of Period-
New Customers in Period) /
Customers at the Beginning of Period.
Customers, the closer you are to 100% the better your business is performing!