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COST / IMPACT ESTIMATE: What is the lifetime value of new customers acquired from Paid Traffic?
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Need help decoding this calculator? Follow the color- coded instructions and watch this video! https://www.loom.com/share/99156841e93646c6bebd40cb21e87310
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STEP 1: INPUT THE COST OF PAID TRAFFIC EVERY MONTHTRAFFICCOST PER CLICK (CPC)MONTHLY SPENDThis first step helps establish a baseline for how much your paid traffic to acquire a new customer costs.

In order you'll fill in the green cells E6 and D6:
or
ange cells:
1. The average cost per click (or cost per visit) in D6
2. Current average monthly spend
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Paid Traffic5,000$1.00$5,000
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STEP 2: CALCULATE THE VOLUME OF NEW CUSTOMERS EACH MONTHTRAFFICWEB CONVERSIONS (LEADS)CUSTOMERSNext up: Let's calculate the volume of monthly bookings from Paid Traffic.

1. Traffic will come from cell C6 automatically
(no need to update)
2. Enter your average conversion rate in cell F10. A conversion is when somebody visits your site from paid traffic and requests a sales call, downloads a white paper, or completes any other web conversion action that puts them into your sales funnel
3. Of all the leads that come in from your website, what percentage become a customer (bookings) at the end of the day? Enter that figure into F11 to calculate aggregate bookings from Paid Traffic.
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Paid Traffic5,00015083.00%
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5.00%
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STEP 3: CALCULATE CUSTOMER ACQUISITION COST (CAC)SPENDCUSTOMERSCACStep 3 focuses on calculating your monthly CAC:

1. Spend and Bookings will autopopulate from E6 and E10
2. CAC will automatically divide spend / bookings and update for you
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Paid Traffic$5,0008$667
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STEP 4: CALCULATE CUSTOMER LIFETIME VALUEMONTHLY REVENUEAVG. TERM OF CLIENT ENGAGEMENT (MONTHS)GROSS LIFETIME VALUELet's talk about the lifetime value of your customer base.

1. How much revenue do they pay you - on average - every single month? Plug that figure into C18.
2. How long does the average customer stay with you? Plug that figure as months (e.g. 1 year = 12 months) into D18.
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Individual New Customer Value (Monthly)$2,50036$90,000
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Aggregate New Customer Value (Monthly)$18,75036$675,000
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STEP 5: CALCULATE CAC ON THE LIFETIME VALUE OF THAT NET-NEW CUSTOMERLIFETIME VALUECACLIFETIME ROIAlmost finished! What is the lifetime ROI of acquiring a new customer from Paid Traffic?

1. Lifetime Value and CAC (E18 and E14) will compute automatically
2. Lifetime ROI will calculate itself in E22. This is the factor (positive or negative) of lifetime return on investment
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Individual New Customer Value (Monthly)$90,000$66713500%
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Aggregate New Customer Value (Monthly)$675,000$5,00013500%
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STEP 6: CALCULATE NET REVENUES BASED ON GROSS SALES VALUELIFETIME VALUETARGET MARGINNET LIFETIME VALUELast but not least: The Industry average target margin for MSPs is approximately 65% of gross sales.

1. Lifetime value in C24 and C25 will update automatically from step 5
2. Update cells D26 and D27 with your businesses target margin to determine the net lifetime value of these customers
3. Voila! E26 and E27 display the net lifetime value of those new logos to your business.
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Individual New Customer Value (Monthly)$90,00065.00%$58,500
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Aggregate New Customer Value (Monthly)$675,00065.00%$438,750
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Need help decoding this calculator? Follow the color- coded instructions and watch this video! https://www.loom.com/share/99156841e93646c6bebd40cb21e87310
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