Customer Acquisition Cost (CAC)

CAC measures the cost of acquiring a new customer.

CAC = (Marketing + Sales Costs) / # of Customers acquired

Customer Life Time Value (LTV)

LTV is how much you expect to earn from a customer during the time they are with your company.

LTV = (Average Purchase Value x Average Purchase Frequency) x Average Customer Lifespan

For a viable SaaS or other form of recurring revenue model LTV should be about 3 x CAC

Monthly Recurring Revenue (MRR)

MRR is simply how much money your product brings in per month.

Conversion Rate

Conversion rate is the number of conversions divided by the total number of visitors. A conversion can refer to any desired action that you want the user to take.

Retention Rate

Retention is the percentage of customers that stay with you over a given time period.

Retention = ((Customer at the end of period - New Customers acquired)/Total Customers at the start) x 100

It costs 6 to 7 times more to acquire a new customer than it does to keep a current client.

Churn rate

Churn is the percentage of customers that stopped using your company’s product or service during a certain time frame.

Churn rate = (Customers at the beginning of period - Customers at the end of period) / Customer had at the beginning of the period