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Estimate the value of a customer opportunity

Enter your assumptions to estimate the value an action could add. The result is a forecast to discuss and test. Evidence that the action works comes from measured results.

Your assumptions

You are growing

Eligible accounts

Eligible accounts, slider

1,00020,000

Expected gain, in percentage points of conversion

Expected gain, slider

-2.0 points+10.0 points

Margin per additional expansion

Margin per additional outcome, slider

$500$50,000

Margin per outcome is what one additional outcome adds over the period, after product and service costs. The program cost below is deducted separately.

Program cost

Program cost, slider

$0$2.0M

Replace the $400,000 starting value with your own cost for the offer, activation, delivery and measurement.

Additional assumptions

Baseline conversion rate, in percent

Baseline conversion rate, slider

1.0%50.0%

Required margin-to-cost ratio

Required margin-to-cost ratio, slider

1.0 times10.0 times

The margin-to-cost ratio your finance team requires before an action earns a test or a rollout. Replace the 3.5 times starting value with your own.

Count margin for

Twelve months counts the first year. A longer period adds a share of first-year margin for each later year, less the running cost of those years. The calculation is undiscounted.

The gain is your expected result. A test with a comparison group measures it.

Forecast

$2.33M

Forecast margin

$400K

Program cost

$1.93M

Forecast net value

The forecast margin is 5.8 times the cost and meets the required 3.5 times.

Break-even, return and scenarios

0.43 points

Gain needed to cover the cost

1.5 points

Gain for margin of 3.5 times the cost

5.8 times

Margin to cost

150

Extra deals

+2.5 points on a 9.0% base takes conversion to 11.5%, a 27.8% relative gain.

Scenarios for your numbers

Scenario	Gain, points	Deals	Margin	Net value	Margin to cost

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Send your scenario and the Stradem team replies with next steps. This request is optional.

How the math works

Extra outcomes equal eligible accounts times the gain in points, divided by 100
First-year margin equals extra outcomes times the margin per outcome
For 24 or 36 months, each later year adds the stated share of first-year margin, and the calculation is undiscounted
Total cost equals the program cost plus the continuing cost of each later year
Forecast net value equals forecast margin minus total cost
Margin to cost equals forecast margin divided by total cost
Break-even gain, in points, equals 100 × total cost ÷ (eligible accounts × margin per outcome × margin multiplier)
The margin multiplier is 1 for 12 months, 1 plus the later-year margin share for 24 months, and 1 plus twice that share for 36 months
The gain for the required margin to cost equals the required multiple times the break-even gain
Target conversion equals the baseline rate plus the gain in points, and relative gain equals the gain divided by the baseline rate, which is undefined when the baseline is zero
A scenario that would take conversion below 0% or above 100% shows no result

Estimate the value of a customer opportunity

Your assumptions

Forecast

Scenarios for your numbers

Talk these numbers through with the Stradem team

Talk the assumptions through