Gavin Gibbons’ Post

If you’re using revenue to calculate LTV, you’re probably doing it wrong, which means you're calculating LTV/CAC wrong. A few weeks ago, I wrote about calculating the gross margin and contribution margin as the core metrics in understanding the unit economics of your business. These margin calculations will be increasingly important as you scale your business since you will need to measure the performance of your profit relative to the cost of acquiring customers. This dynamic manifests in the widely used metric LTV/CAC. As your company matures, this will be a critical metric to track and is also regularly benchmarked by VCs, which means it affects your ability to raise capital at attractive valuations over time, especially after the Seed round when you’re supposed to be maturing the business. Great companies typically have LTV/CAC above 3x, but if you’re above 5x, it can suggest that you are limiting your growth potential by underinvesting in customer outreach. So how do you calculate it?

Cut your CAC in half, double your profit – without spending a dime more. Businesses are burning cash on customer acquisition. Yet, 68% don’t even know their true CAC. Tracking it isn’t optional anymore – it’s your competitive edge. Ask yourself: Are you pouring money into channels that just don’t convert? Or worse, ignoring the data altogether? The game changes when you track every dollar from lead gen to sale. You’ll know what’s working – and where to stop wasting time. The path to profit isn’t always about selling more; it’s about spending smarter. Double down on what works. Ditch what doesn’t. Simple. #BusinessGrowth #CustomerAcquisition #MarketingStrategy #DataDriven

You’re only ONE mistake away from mastering client acquisition. No one reaches success without making mistakes. Discover the future trends and innovations in client acquisition strategies. Stay ahead of the curve and ensure your success. 💡📈 Contact us for more insights! Share your thoughts below. #ClientAcquisition #MarketingTrends

I’m hearing from many founders that this year's big goal is profitability. One metric to watch is customer acquisition costs. As you grow, the cost tends to follow the law of diminishing returns. The good old ways (i.e. 2 years ago) meant ramping up your CAC as long as customers were buying. Now you have to ask yourself, “How can we get more out of what we’re doing?” One of my clients had the goal of profitability by the end of 2024. We knew getting more leads at the top of the funnel wasn’t the answer. While working together, we focused on optimizing your funnel, improving sales and marketing efficiency and focusing narrowly on their ideal customers. Here’s what we worked on: ✅ Modelling the data to determine which part of the funnel will impact lead-to-customer conversion rates. ✅ Reducing the time it took for demo requests to be followed up through automation. ✅ Coaching reps on better discovery to get deeper into pain points. ✅ Improving meeting attended conversion rates for leads that came from outbound. ✅ Add different payment terms and schedules to ease the burden of upfront costs. After 60 days, they improved their discovery-to-proposal conversion rate by 27%. There wasn’t a silver bullet that solved everything. But every change compounded. In the world of profitability, it’s about getting more out of what you’re already doing. If that’s on your mind too, DM me to chat!

“I don’t know how to start tracking my growth metrics.” Let me eliminate that excuse for you right now with this simple guide. Here’s how it works: Key Metrics to Track → Churn Rate → Customer Growth Rate → Customer Lifetime Value (LTV) → Customer Acquisition Cost (CAC) → Monthly Recurring Revenue (MRR) Why You Need These Metrics → Optimize sales & marketing efforts → Track startup growth trajectory → Guide investor presentations → Evaluate product-market fit What to Do Next → Monitor the LTV/CAC ratio → Keep a close eye on churn to ensure growth → Focus on increasing MRR to show strong PMF If you follow this strategy, you’ll have a clear view of your startup’s health and growth potential. Now, get started! PS. Grab a high-res image at: https://lnkd.in/g7ShBpyx PPS. Join 5,000 people at: thestartupfinance.com

Why is LTV crucial for your Business? 1️ Sustainable Growth: LTV provides a roadmap for sustainable growth by identifying high-value customers and tailoring strategies to retain and nurture them. 2️ Precision in Marketing: With LTV insights, marketing efforts become laser-focused. It's not just about acquiring customers; it's about acquiring the right ones and optimizing resources. 3️ Financial Health: LTV guides financial decisions. Knowing the long-term value of a customer helps in budgeting, resource allocation, and maintaining a healthy bottom line. 4️ Adaptability: In a competitive market, adaptability is key. LTV empowers businesses to adapt their strategies based on customer behavior, ensuring resilience in the face of change. 5️ Customer-Centric Approach: LTV emphasizes the importance of building lasting relationships. It shifts the focus from short-term gains to the enduring value a customer brings over time. In a nutshell, LTV is the compass guiding businesses through the intricacies of customer relationships. Embrace it, and not only will your business thrive, but it will also lead with purpose in an ever-evolving #businessadvice #lifetimevalue #linkedintips

Achieve a 350% Increase in Client Spending with This Passive Income Approach Explore how a strategic passive income method led to a remarkable 350% rise in client spending for my clients. Uncover the techniques and actionable steps that drove this impressive revenue growth. Here’s the approach: - Building Trust - The 3% Rule - Creating a Semi-Passive Funnel - Utilizing Effective Tools Watch the full video to learn more: https://lnkd.in/e3nHugky #BusinessGrowth #PassiveIncome #RevenueBoost #BusinessStrategy

Follow along on our ABM murder mystery and see what you think about the possibility of "Brian Journey" as the culprit. Talking about buyer journeys, I would love to hear about any challenges you may have with the development or use of your company's buyer journey!

When it comes to business growth, tracking the right metrics can make all the difference. Think of it like having a dashboard in your car – these numbers show if you're headed in the right direction, if you need to slow down, or if it's time to refuel. Here are some essential metrics to keep your eye on: ✅ Revenue Growth: How much are your sales increasing over time? Consistent revenue growth is a good sign that you're gaining traction. Flat or declining numbers? Time to rethink the game plan. ✅ Profit Margin: Revenue is what you make; profit is what you keep. A healthy profit margin means you’re not just earning but keeping enough to reinvest. ✅ Customer Acquisition Cost (CAC): This tells you how much it costs to win a new customer. The lower, the better! Aim to spend less on acquiring each new customer – it’s a huge factor in long-term growth. ✅ Customer Lifetime Value (LTV): How much will each customer spend with you over time? This metric helps you understand if your customers stick around long enough to make the investment worth it. ✅ Churn Rate: This is the percentage of customers who stop buying from you. High churn is a red flag! Focus on ways to keep customers happy and loyal. ✅ Net Promoter Score (NPS): Want to know how much your customers love you? Ask, “How likely are you to recommend us to a friend?” NPS shows if you’re building strong relationships. ✅ Market Share: Are you gaining ground or losing to competitors? Growing market share means you’re winning in your industry. ✅ Employee Productivity: The backbone of any growing business is a productive team. Track productivity to see if your business can handle and scale growth. ✅ Monthly Recurring Revenue (MRR): If you rely on subscriptions or recurring sales, MRR is key. Growing MRR means a steady stream of income you can count on month after month. ✅ Website Traffic & Conversion Rate: More visitors on your website? Great! But how many are actually buying? Focus on both traffic and conversion to turn clicks into customers. ✅ Growth isn’t just about more revenue – it’s about sustainable, profitable growth over time. Keep these metrics in check to stay on track, make better decisions, and drive your business forward. 💪 #BusinessGrowth #BusinessDevelopment #GrowthMindset #LearnWithMo

What’s the One Metric That Reveals If Your Business Is Thriving? 🤔 Net Dollar Retention (NDR)—the ultimate growth check for any business. Here’s the deal: NDR measures how much revenue you’re holding onto (and growing) from your existing customers. It’s like a report card for your product’s value. If your NDR is over 100%, congrats—your current customers aren’t just sticking around, they’re spending more! 💰 Why does this matter? Because real growth isn’t just about getting new customers—it’s about keeping the ones you have and making them even happier. So, how’s your NDR looking? #GrowthHacks #CustomerRetention #BusinessMetrics