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Lifetime Valuation
How is the Lifetime Valuation calculated?
To work out the Lifetime Valuation we need to review the following variables.
Total BBX sales = New customers and revenue earned. Note: Did you have to turn away a cash customer to service a BBX customer?
Total BBX purchases = Cash saved where otherwise cash would have been spent.
Variable Cost (%) = Cash cost to service a new BBX customer. This is only the variable cost and excludes fixed costs such as rent, rates, wages and so on. As an example of a restauranter, it would be just the wholesale cost of the food on the plate and drink in the glass which might be 30% of the menu price.
Total Cash Fees = All fees including sign up and annual card fee paid to BBX since opening the BBX account (less VAT).
Referral Ratio = Number of cash referrals received as a result of servicing the BBX clients. Most businesses generate new sales through word of mouth. How many of your clients on average refer new business?
Average Customer Value = Average amount earned from a client. By knowing the average customer value we can work out approximately how many new customers you have received.
The Calculation Formulas
Total Cash Spent = (total BBX sales * variable cost %) + (total cash fees /1.2 )
Total Cash Saved = total BBX purchases – total cash spent
Cash Referrals = total BBX sales * (1 / referral ratio)
No. New Customers: = total BBX sales / average customer value
BBX Balance to Spend: = Current BBX balance available to spend in addition to the cash savings
