Influx Metric: MLV:CAM ratio
“I do not think that there is any other quality so essential to success of any kind as the quality of perseverance. It overcomes almost everything, even nature.” – John D. Rockefeller
Influx Metric #6: MLV:CAM ratio
Here is the next article in our series of ‘Influx Metrics’. The series covers the metrics that help you analyse your business data. This article introduces the MLV:CAM ratio and builds on metrics covered in previous articles, which you can find here:
The MLV:CAM ratio assesses the efficiency of your marketing techniques. The ratio represents the (average) cost to acquire each member versus the (average) value each member brings to the business.
For example, a ratio (multiple) of four means that for every $1 you spend in marketing, you get $4 back.
How do you calculate the MLV:CAM ratio?
MLV:CAM ratio = MLV/CAM
Let’s imagine your MLV is $4,500 and your CAM is $450.
MLV:CAM Ration = $4,500 / $450
= 10 (or 10:1)
See the links at the top of this article if you would like to see how to calculate MLV or CAM.
There is no “perfect” ratio to aim for, and what is ‘great’ will differ based on a number of factors. For example, the type of fitness business, size, overheads, location, number of members, specific fitness niche that you have.
No matter what type of business you’re in, the aim is to increase the ratio (i.e. improving your marketing processes and/or the value each member brings). Any number close to (or below) one is not a good sign in the long term, and indicates unsustainable marketing techniques and/or members that are not profitable.
Our next few articles will show you how to look at your own business, with the intention of increasing the MLV:CAM ratio. There are two main ways you can do this, and I’ll suggest analysing both of them:
1. A focus on improving marketing techniques
2. A focus on acquiring the type of members you want