Long-Term ROI: Measuring the Value of Customer Acquisition

Long-term ROI1 = Long-term customer value (LTV365) / Direct investment cost on the demand side> 1.

This formula helps measure the long-term profitability of acquiring new customers. It takes into account the lifetime value of a customer (LTV365), which is the total revenue a customer generates over their entire relationship with your business, and the direct costs associated with acquiring them. When the long-term ROI1 is greater than 1, it indicates that the investment in acquiring a new customer will generate more revenue than it costs, ensuring a sustainable business model.