4 ms·
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
by 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 agoYeah, 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 agoI 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 agoGreat 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.