Category Archives for "Metrics"

Jul 31

Cost per acquisition (CPA) and customer acquisition cost (CAC)

By Eckhard Ortwein | Lean-Case

cost per acquisition

Cost per acquisition (CPA) and customer acquisition cost (CAC) are often used interchangeably but that’s wrong and in reality they’re completely different metrics. These metrics are essential to the health of your company and they shouldn’t be confused because mixing them up can result in a failure.

In this article, we’ll compare CAC vs CPA, explain the difference between these metrics, and provide you with cost per acquisition formula. You will also learn how to calculate customer acquisition cost.

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Jul 29

TAM, SAM, and SOM: fundamental market size metrics

By Eckhard Ortwein | Business Models Essentials

tam sam som

When you are starting a new business and are calculating its profit potential or are setting a revenue goal for your company when making a business plan, it’s crucial to root these figures. That’s why you need to perform a market analysis and assess the market potential for your products and services. In other words, you should start from TAM, SAM, SOM. These are the metrics that investors look at when making their investment decision.

Wondering what these abbreviations mean and why they are useful to investors when assessing an investment opportunity? Keep reading.

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Jul 10

What Is Customer Lifetime Value (CLTV) and How to Measure It

By Eckhard Ortwein | Lean-Case

Customer lifetime value

CLV, CLTV or LTV is one of the most important metrics for growing companies which can help you understand a reasonable cost of customer acquisition. Roughly defined, customer lifetime value (CLTV) indicates the total revenue minus rlated cost a business can expect to generate from a customer in the course of business relationship. CLTV compares customer’s revenue value to the company’s predicted customer lifespan and allows businesses to identify significant customer segments that are the most valuable to them. Whether you have a traditional offline business, a fully digital business like SaaS or some combination of the two, calculating your CLV can help you make smarter decisions about your marketing and sales budgets and bring better returns on your investments.

In this article, we’ll briefly cover how to calculate CLTV and how to get started with CLTV analysis.

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Jun 30

Direct Cost and Cost of Goods Sold (COGS)

By Eckhard Ortwein | Investor

direct cost

Tracking business expenses is very important for business owners. It allows you to improve money management and monitor the growth of your business, plays a crucial role in calculating profitability, and can help you attract investors. This article covers two key metrics which you should track on a regular basis – direct cost and cost of goods sold (COGS).

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Jun 30

Cash Burn Rate – a guide to use this metric in business planning

By Eckhard Ortwein | Investor

cash burn rate

Burn rate is a simple metric that every entrepreneur must be familiar with because, if calculated correctly, it’s crucial for planning, growth, and the success of any business. It is used to measure sustainability or how long a company can operate until it runs out of money. But what exactly is cash burn rate and how can we calculate it? Keep reading this article and you will find answers to these questions.

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