□Īs you increase your LVA, you’ll have more money to spend on AAC. Now they’re working out with all their friends…which boosts your retention. It just provides a little bit of extra motivation for a current athlete to bring in a new athlete. Plus there’s a potential snowball effect with your new athlete attracting their friends and family because of that bonus. So putting those two pieces together, spending $100 per athlete on a referral program is a good investment. Having this number allows you to experiment with a variety of marketing options. This $252 is the maximum you can spend to acquire a new customer. Now you need to determine what type of profit margin you want on that leftover $630, for this example lets shoot for 60%, which leaves you 40% for marketing expenses or $252. LVA – FC = Revenue before marketing expenses. As you grow, this number should decrease. Take your overhead expenses(rent, insurance, utilities, salaries, etc) during the LVA divided by the number of athletes to find your Fixed Cost (FC) per athlete.ĩ months of overhead costs you $50,000 and you have 100 athletes, your Fixed Cost per athlete is $500. There’s a bunch of models out there, but here’s a simple one. I would trade $100 every day to get $1,130 over the next 9 months. Using our example above, if our referral program awards $100 to the current member to bring one of their friends in and the sign up, the AAC is $100/$1,130 or 8%.
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