The model

Same budget. Different bet.

Your numbers. Three years. Two paths.

$10M
30%
$40
40%
Assumptions

Placeholders, so the mechanics show. Push them around.

As % of last year’s revenue.

% of revenue

Revenue a new customer brings in year one.

$

How much your cost of a new customer rises each year on its own.

% a year

CAC falls this much per year for every 10 points of budget on brand.

% per 10 pts

Repeat rate gained per year for every 10 points of budget on brand.

pts per 10 pts

Repeat rate can’t rise past this.

%

Brand is slow here: half its effect lands in year one, the rest after. Money spent on brand isn’t buying customers today, so the brand path can dip first.

Illustrative
Three-year revenue path, performance only versus brand times performancePerformance only goes from $10.0M to $10.6M in year three. Brand times performance goes from $10.0M to $13.7M. Illustrative.$9.0M$11.7M$14.5MTodayYear 1Year 2Year 3$13.7M$10.6M
Brand × performancePerformance only

Year three is $3.1M higher on the brand path. Year one is worse.

Revenue by year for both paths
 TodayYear 1Year 2Year 3
Performance only$10.0M$10.8M$11.0M$10.6M
Brand × performance$10.0M$9.7M$10.8M$13.7M
CAC, brand path$40$40$36$33
CAC, performance only$40$44$48$53
Repeat, brand path40%45%54%63%
How the model works
  1. Each year the budget is the marketing % of last year’s revenue.
  2. On the performance path all of it buys new customers at that year’s CAC. CAC drifts up by the drift rate.
  3. On the brand path your chosen share goes to brand. The rest buys customers. Brand lowers CAC and lifts repeat, with a lag.
  4. Revenue = repeat rate × last year’s revenue + new customers × first-year value.

No margin, channel mix or price in here. It shows the shape of the argument.