The money printing machine

Are you lacking confidence in your marketing ROI?

In this day-and-age of digital marketing making up the preponderance of our marketing efforts, John Wannaker’s 100 year old truism should now be dead in small business-land:

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“Half the money I spend on advertising is wasted, the trouble is I don't know which half.”

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We have the tools and data to track what marketing is working, yet most small businesses don’t bother to accurately track the right data, and use the simple ratio of LTV:CAC.

LTV is Lifetime Value, but not as many people spout - total ‘sales’ from an average customer over the time they are with you.

It’s the Lifetime ‘Gross Profit’ Value.?

CAC is Customer Acquisition Cost, which is easy to measure (marketing spend in a month, divided by the number of new customers in that month).

The LTV:CAC ratio should be no less than 3:1, and no more than 5:1.

Less than 3:1, and you are getting too close to break-even (for every $1 you invest to acquire a customer, you make $3 gross profit, or $2 after you deduct that $1 CAC - so a LTV:CAC of 2:1 is break-even).?

Greater than 5:1, you are leaving money on the table - who wouldn’t put $5 into a machine, and get $4 (or $3 after CAC) gross profit back?

I do love my numbers, and when I came across this simple ratio a few years ago listening to podcasts around SaaS and subscription businesses, well, I got excited.

But I have come to realise, this ratio can be used in any type of business.?

You just need to set the systems up to track the right data.

One Tool or Professional Development Resource:

Watch this excellent 28 minute Alex Hormozi video on the LTV:CAC ratio - the #1 metric you should know and optimise for in your marketing.?

We wrote about this ratio in great detail in our “Marketing Funding Flywheel” eBook, exactly for the reasons Hormozi talks about in his video.?

Yet, most small business owners:

• don’t know about it
• its power, and / or
• how to accurately measure and use it.?

Our eBook opens with the three key principles in small business marketing I school owners on when we begin working together (the LTV:CAC ratio being one of them), then we have a shit tonne of other marketing tools to help you get more from your marketing budget.?

In fact, turn your marketing into a money printing machine.??

Podcasts live this week

• Episode 533: Scaling to 14 FTEs to Seven Figures: Insights from StoryLearning's Founder & CEO on Achieving Revenue Growth and Mastering Personal Development for Long-Term Business Success. (Olly Richards)
• Episode 534: Unveiling Business Mastery with the founder of Go proposal: Navigating Growth, Exit Strategies, and Financial Order for Sustainable Success, Leading to Significant Revenue Generation and High-Performing Team Development. (James Ashford)
• Episode 535: Crafting Success: Mark Hubbard's Share Journey at Blizzard Brewing Co. From CEO to Crowdfunding Expert, Achieving Record Revenue, Leading a Team of 20+, and Transforming the Craft Beverage Sector. (Mark Hubbard)

Podcasts Throwback

With a background in finance, co-founded a technology company based on the financial storytelling techniques currently used by 40,000 people in 96 countries around the world. Started with only 3 FTE to more than 40 FTE.

Listen to Episode 124 I did with Alan in July 2021.

Regards,

Troy Trewin | Founder

P.S. If you’re not sure how to work through your #1 growth challenge at the moment (people, marketing, strategy, systems or funding), book a Growth Chat with me. In 20 minutes, I will recommend some resources to help.