Presented at a Hubspot User Group Sept 2016. Focused on the LTV model, how to calculate and use LTV and CAC for budgeting, strategy development, and other marketing leadership. A great topic for in-house marketing leadership, as well as marketing/ad agency leaders.
13. 13
It takes 12 positive interactions to
make up for one unresolved negative
experience
=
SOURCE: https://www.helpscout.net/75-customer-service-facts-quotes-statistics/
14. 14
9%
70%
91% of unhappy
customers will not
willingly do
business with you
again.
Resolve a complaint
in the customer's
favor and they will do
business with you
again 70% of the time.
START
SOURCE: https://www.helpscout.net/75-customer-service-facts-quotes-statistics/
15. 15
Americans tell an average of 9 people about good experiences, and tell 16
people about poor experiences.
vs.
SOURCE: https://www.helpscout.net/75-customer-service-facts-quotes-statistics/
17. 17
Lifetime Value (LTV)
• What’s the value that this customer brings?
• Long-term view of customers
• “Average deal size” if one-time
• How can companies with inexpensive products
justify big marketing budgets?
20. 20
Lifetime Value (LTV)
• Simple LTV = Total revenue from client
• Traditional LTV = (Avg. gross margin) x (Customer
retention rate / (1 + Discount rate - Customer retention
rate)
21. 21
Lifetime Value (LTV)
• Simple LTV = Total revenue from client
• Traditional LTV = (Avg. gross margin) x (Customer
retention rate / (1 + Discount rate - Customer retention
rate)
• Gross margin not revenue
• Churn matters
• “Bird in the hand is worth two in the bush”
22. 22
Customer Acquisition Cost (CAC)
• (Sales + Marketing + hard costs) / number of deals
acquired
• Does *not* factor in overhead, delivery, support
(operating expenses)
41. 1) Add more blocks with healthy unit economics
2) In a market with lots of blocks
42. 4) Combine CAC with sales metrics to
reverse-engineer marketing budgets
CAC = $6,000
Close rate = 33%
Qualified leads = $2,000 each
Qualification rate = 20%
Cost per lead = $400
Web conversion rate = 5%
Web traffic = $20/visitor
What channels, strategies, content can
drive leads for $400/each? $20 web
visitors?
43. 5) Sales forecasting / quotas
CAC = $6,000
Sales Salary = $6,000
=Close one deal per month
LTV:CAC Ratio = 5:1
They ask: “Can we do XYZ?”
Because ratio is healthy: clear YES!
44. 6) Team forecasting
Pipeline = 4 new customers
LTV = $25k
Total new value = $100k
? Staffing
? Support
? Overhead/infrastructure
45. 7) Find more of the right clients
MY VAMPIRE MATRIX
Let me give you my background. Not to claim credibility, but to paint context.
Test this against your own experiences with your business
My goal is to start the conversation. Let’s continue it somehow.
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
This isn’t much about hubspot. Its about being better marketers. Hubspot is a tool. A great one.
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
A number
A framework of how to think about growth
Drive marketing strategies + tactics
A way of thinking
A way of leading
