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How To Double Profit Without a Single New Customer
A 30% increase in lifetime value (LTV) can produce a 90% increase in profit, with no new customers, no new ad spend, and the same business, the same products, and the same traffic. That number surprises a lot of people when I ran the math on it, but once you see how the math actually works, it makes complete sense.
The problem is most founders are measuring LTV completely wrong, and making major acquisition decisions based on a number that doesn't mean what they think it means.
In This Episode:
• Why the classic LTV definition ("total revenue per customer over their lifetime") will wreck your acquisition decisions, and what to track instead
• The three components of contribution margin-adjusted LTV (CM-LTV), and why skipping any one of them means your decisions are built on bad math
• How to use cohorts properly so you're comparing apples to apples across channels and time periods
• Why your Facebook customers, your Google customers, and your YouTube customers almost certainly have different LTV values, and why that changes your Allowable Customer Acquisition Cost (ACAC) for each channel
• The three pillars that drive LTV: product, habit integration, and the hybrid product model
• How to think about what to sell next by mapping the problem your product solves to the next problem that creates
If you're making acquisition decisions based on a revenue-based LTV number, this one's worth your time.
Timestamps
0:00 - Why doubling customers is the hard way
2:15 - The three problems with how most measure LTV
8:30 - What contribution margin-adjusted LTV looks like
14:00 - Breaking LTV down by cohort and channel
20:45 - The profit math: a 30% LTV improvement
26:00 - The three pillars of increasing LTV
38:15 - The hybrid product model and why it matters
Free Stuff
Want to see how your profit model stacks up? Try my FREE profit model analyzer and discover your fastest path to doubling your profit and cash flow: https://tools.scaleadvisors.com/pma
Get My Book
Love the podcast? You'll love my #1 best-selling book, The Scalable Profit Model, even more. Snag a copy for free at https://ScaleAdvisors.com/book (just pay S&H).
Work With Me
If you're doing $1M+ and want my help growing faster, with more profit, more cash flow, and less stress, visit https://ScaleAdvisors.com/services
Get Some Good Karma
If you enjoyed this episode, please take a second and subscribe, leave a review, and tell a friend. That helps spread the word, helps others, helps me, and gives you some good karma.
View all episodes
By Jeremy ReevesA 30% increase in lifetime value (LTV) can produce a 90% increase in profit, with no new customers, no new ad spend, and the same business, the same products, and the same traffic. That number surprises a lot of people when I ran the math on it, but once you see how the math actually works, it makes complete sense.
The problem is most founders are measuring LTV completely wrong, and making major acquisition decisions based on a number that doesn't mean what they think it means.
In This Episode:
• Why the classic LTV definition ("total revenue per customer over their lifetime") will wreck your acquisition decisions, and what to track instead
• The three components of contribution margin-adjusted LTV (CM-LTV), and why skipping any one of them means your decisions are built on bad math
• How to use cohorts properly so you're comparing apples to apples across channels and time periods
• Why your Facebook customers, your Google customers, and your YouTube customers almost certainly have different LTV values, and why that changes your Allowable Customer Acquisition Cost (ACAC) for each channel
• The three pillars that drive LTV: product, habit integration, and the hybrid product model
• How to think about what to sell next by mapping the problem your product solves to the next problem that creates
If you're making acquisition decisions based on a revenue-based LTV number, this one's worth your time.
Timestamps
0:00 - Why doubling customers is the hard way
2:15 - The three problems with how most measure LTV
8:30 - What contribution margin-adjusted LTV looks like
14:00 - Breaking LTV down by cohort and channel
20:45 - The profit math: a 30% LTV improvement
26:00 - The three pillars of increasing LTV
38:15 - The hybrid product model and why it matters
Free Stuff
Want to see how your profit model stacks up? Try my FREE profit model analyzer and discover your fastest path to doubling your profit and cash flow: https://tools.scaleadvisors.com/pma
Get My Book
Love the podcast? You'll love my #1 best-selling book, The Scalable Profit Model, even more. Snag a copy for free at https://ScaleAdvisors.com/book (just pay S&H).
Work With Me
If you're doing $1M+ and want my help growing faster, with more profit, more cash flow, and less stress, visit https://ScaleAdvisors.com/services
Get Some Good Karma
If you enjoyed this episode, please take a second and subscribe, leave a review, and tell a friend. That helps spread the word, helps others, helps me, and gives you some good karma.