CAC Case Study

Case Summary:

You are a new product manager for Heal a fictional company and have been tasked with
delivering solutions that will improve the acquisition and conversion rate of Healthcare
Professionals (HCPs). You know that paid marketing is the primary acquisition channel and
you have requested some data from the Marketing department to establish a baseline of
current state. You were provided with the following metrics:

Initial marketing spend per completed application (May)

$20

Total Marketing spend on applications (May)

$2,000

Conversion rate to Valid Application (May)

80%

Conversion rate to Fully Onboarded (May)

25%

Conversion rate to Scheduled to Work (May)

33%

Conversion rate to Worked First Shift (May)

100%

Net revenue per shift per HCP

$50

Average monthly net revenue (YTD)

$150,000

Average monthly working HCPs (YTD)

315

Average revenue churn (YTD)

11%

Additional Assumptions
HCPs who worked their first shift in May went on to work the following amount of shifts:
33% worked a total of 3 shifts in their first 30 days
33% worked a total of 8 shifts in their first 30 days
20% worked a total of 12 shifts in their first 30 days
14% worked a total of 16 shifts in their first 30 days
Questions:
1. How much did Heal pay to acquire new working HCPs in May? *

2. How much did Heal pay to acquire each new working HCP in May? *

3. What is the full conversion rate of new HCPs in May? How many HCPs worked their
first shift? *

4. What is the lifetime value of new working HCPs acquired in May? *

5. Heal has a target LTV-to-CAC ratio of 3 for the fiscal year. Assuming the YTD metrics
in above already include the May results, what is the maximum amount that they
should pay per new working HCP to ensure they achieve this goal? *