CAC, CLV, and Time to Payback

By: Robert Grosshandler | July 12, 2018

We’re in the thick of raising more capital to fund new member growth.  Prospective investors want to know all sorts of things, but right now, they think the most important measures (metrics) are the following:

Customer Acquisition Cost (CAC)

In the first quarter of this year (Q1), we spent less than $10 in cash to acquire a new member.  That may be good or bad; the following two metrics are needed to tell the whole story.

Customer Lifetime Value (CLV)

We’re estimating this number, because we don’t yet have enough history with how OUR customers behave.  Again, based on Q1 2018 results, we’re estimating that a customer will earn iConsumer over $75 in cash before they ride off into the sunset.

In other words, for every $10 in cash we spend getting a new customer, we’re estimating we’re going to get $75 while they remain our customer.  That’s after we’ve paid them their Bitcoin.  That’s pretty darn good.

Time to Payback

How long does it take for a customer to payback their CAC?  For us, this is a critical number, because we don’t yet have enough cash to do all the things we want to do.

Again, based on Q1 2018 results, it’s less than 45 days to recoup our cash spend.  That’s a remarkable number.  That means we spend about $10 to gain a customer, and in two months they’ve shopped enough to pay us back.

What that really means for an investor

Every $10 invested should bring in two to four new customers in a year, since it takes about 90 days on average for us to get paid by retailers and people don’t shop on the first day they join.  In January, we spend $10, get a new member, they shop 30 days later, we get paid 90 days after that.  That makes it May.  We spend the $10 again (now that we’ve been paid) and get a new member, and have $10 in our pocket in November.  And we spend the $10 and get a new member.  And the result is a total lifetime CLV per $10 invested of around $300.

And one more thing about CLV and airdrops

In the materials we’re distributing to prospective investors, we’re talking about a potential additional revenue source – paid airdrops.  Token/coin issuers (folks doing cryptocurrency type stuff) have begun to pay companies to help them distribute their tokens to consumers.  These are called airdrops.

We’re really well situated to help crypto issuers with that.  We’re estimating that we’ll increase the CLV by about $20 once we get that business up and running.