This month I’m running the education moments for BNI Up and Coming, and the topic is customer acquisition — three weeks, three ten-minute slots. This is week one, and it’s the boring one on purpose. Before you can have a useful conversation about getting more customers, you need two numbers: what a customer is worth to you, and what one costs you to get.
Most owners I talk to have a feel for both. Almost nobody has the actual number. That’s fine — but a feel can’t tell you whether spending more on marketing next quarter makes you money or costs you money. The number can.
The two numbers
LTV — lifetime value. The profit one customer brings you over the whole time they do business with you. Not revenue. Profit. If you do $4,000 jobs at a 20% margin, that customer is worth $800 to you, not $4,000. And if they come back every year, they’re worth a lot more than that.
CAC — customer acquisition cost. Everything you spent to find customers, divided by how many new ones you actually got. All of it counts: ads, your website, printing, sponsorships, BNI dues, anyone you paid to put your name in front of people. Spend $6,000 over a year, pick up 20 new customers, your CAC is $300.
The ratio is the point
Neither number means much alone. Divide the first by the second and you get the one that does — LTV:CAC. What a customer is worth compared to what it cost to get them.
Roughly how to read it:
- Below 1:1 — each new customer costs more than they earn you. Growth actively makes it worse. Fix the cost side or the profit side before you spend another dollar finding customers.
- 1:1 to 3:1 — customers pay for themselves with a little left over. Sustainable, but there’s no cushion. If your cost per customer creeps up, you’re underwater fast.
- Above 3:1 — every customer funds the next two or three. This is where growth actually comes from, because you can afford to spend more finding customers and still come out ahead.
3:1 gets thrown around as the benchmark. It’s a rule of thumb, not a law. A one-person shop with almost no marketing spend can post a wild ratio and still be barely scraping by, because the real constraint is volume, not efficiency. Use the number to see which lever is stuck, not as a grade.
Fair warnings before you fill it in
Estimates are fine. This is a baseline, not a tax return, and a number you sat down and guessed at beats a number you never worked out. Two things people get hung up on:
The worksheet computes profit on a single job, not a true lifetime, because one job is something you can actually estimate in five minutes. If your customers come back, your real LTV is higher than what line E says — treat it as a floor.
And count your BNI dues as marketing spend. They are. So is your website, so is the truck lettering. If you paid for it to help people find you, it goes on line F.
The worksheet
Print it, fill it in, bring the ratio next week. Nothing else on the sheet needs to leave your hands — your revenue is your business, and the only thing we’re comparing as a group is the ratio at the bottom.
One page, letter size. Or just hit Ctrl+P.
// worksheet · week 1 of 3
What a customer costs you
Use the last 12 months. Estimates are fine — this is a baseline, not a tax return. Your numbers stay with you; next week we only use the ratio at the bottom.
What a customer is worth
| A | Revenue, last 12 monthsTotal sales |
$
|
| B | Paying customers in that periodOr jobs, if that’s how you count |
#
|
| C | Average revenue per customerA ÷ B |
$
|
| D | Net profit marginWhat’s left after all costs, as a percent |
%
|
| E | Net profit per customerC × D |
$
|
LTV — lifetime value. The profit one customer brings you over the whole time they do business with you. Line E uses a single job because it’s easier to estimate. If your customers come back, your real LTV is higher.
What a customer costs
| F | Marketing spend, last 12 monthsAds, website, printing, BNI dues, sponsorships, anyone you paid to find customers |
$
|
| G | New customers gained in that periodFirst-time only, not repeats |
#
|
| H | Cost per new customerF ÷ G |
$
|
CAC — customer acquisition cost. Everything you spent to find customers, divided by how many new ones you got. Spend $6,000, gain 20 new customers, your CAC is $300.
LTV:CAC ratio
| Profit per customer ÷ cost per customerE ÷ H — what a customer is worth compared to what it cost to get them |
: 1
|
Reading your number
| Below 1:1Each new customer costs more than they earn. Growth makes it worse. Fix the cost or the profit side before spending more. | 1:1 to 3:1Customers pay for themselves with little left over. Sustainable, but no cushion if the cost per customer rises. | Above 3:1Each customer funds the next two or three. This is where growth comes from — you can spend more on finding customers and still come out ahead. 3:1 is a common benchmark, not a law. |
Bring your ratio next week. Nothing else on this sheet needs to leave your hands.
Worksheet by Bondbyte Inc. · bondbyte.com · 509.949.2162
If the number bothers you
The usual reaction to working this out is that the cost side is higher than you thought, or the profit side is thinner. Both are fixable, and neither is fixed by handing more money to whoever you’re already handing money to.
Week two we’ll get into where customers actually come from and which of those channels you can steer. If you want to talk about your own numbers before then — or about the website end of it, which is usually the cheapest lever nobody’s pulling — give me a call. No forms, no funnels. Just a conversation.