4 ms·

I wrote about it here https://medium.com/@franz.enzenhofer/about-targeted-list-landing-page-hashes-9dd719df7068?source=friends_link&sk=a03ea42c32b9331226828d340

by franze 6y ago

I wrote about it here https://medium.com/@franz.enzenhofer/about-targeted-list-landing-page-hashes-9dd719df7068?source=friends_link&sk=a03ea42c32b9331226828d340ada0579 https://medium.com/@franz.enzenhofer/about-targeted-list-lan... and played around with the model since then a lot. As long as a company does not have organic growth. Meaning Referral (existing customers bring in new customers) > Churn (losing customers) there just is no scenario where it will end well for the company. Adding investor money for paid growth is at best a halfway decent accelerator, at worst noise that hides the real performance of a company.

3pt14159 6y ago
That's not true. There are plenty of companies where referrals are non-essential or non-existent, but the company is able to turn $1 of advertising into an LTV of $20 even if the customer churns. Imagine an app that helps a woman through pregnancy, for example. The churn rate on its own doesn't mean that the product is necessarily trash and the lack of referral doesn't mean that the product isn't appreciated. Some buyers have needs on short timescales or do not naturally refer other buyers.
- franze 6y ago
  Yeah, that's the second exception in the article. RCLV - a real customer lifetime value to calculate your other costs against. But doing internet stuff since 1998 and startups since 2008 I have yet to encounter a LTV that is not full of.... wishfull thinking. To stay longterm successful R > C!
  - ChefboyOG 6y ago
    I second this. I've worked for a variety of early and mid-stage startups in my career, and to varying degrees, all of them had a non-trivial amount of hand-waving in calculating their LTV.
- anticsapp 6y ago
  Great example. People sign up for BabyCenter, maybe from a paid search ad. Nine months and done. Insanely high advertising CPMs there because first time parents are about to make life long purchasing decisions.

by franze 6y ago

3pt14159 6y ago

That's not true. There are plenty of companies where referrals are non-essential or non-existent, but the company is able to turn $1 of advertising into an LTV of $20 even if the customer churns. Imagine an app that helps a woman through pregnancy, for example. The churn rate on its own doesn't mean that the product is necessarily trash and the lack of referral doesn't mean that the product isn't appreciated. Some buyers have needs on short timescales or do not naturally refer other buyers.

franze 6y ago
Yeah, that's the second exception in the article. RCLV - a real customer lifetime value to calculate your other costs against. But doing internet stuff since 1998 and startups since 2008 I have yet to encounter a LTV that is not full of.... wishfull thinking. To stay longterm successful R > C!
- ChefboyOG 6y ago
  I second this. I've worked for a variety of early and mid-stage startups in my career, and to varying degrees, all of them had a non-trivial amount of hand-waving in calculating their LTV.
anticsapp 6y ago
Great example. People sign up for BabyCenter, maybe from a paid search ad. Nine months and done. Insanely high advertising CPMs there because first time parents are about to make life long purchasing decisions.