Fun presentation on things I have learned as a VC about acquiring customers

2. I’ve been lucky to learn from some of the following CRV
companies that THAT WORKED!

3. AND I’ve been ”lucky” to learn from some of the following
CRV companies that DID NOT WORK!

4. Marketing can’t
overcome a broken
product

5. Great Products Typically Market Themselves

6. Test your value proposition early

7. Test your value proposition early

8. Money Spent to Acquire
a Customer (CAC)
Profits Generated from the
Lifetime of that Customer (LTV)
>
If...
...you have a broken business model

9. LTV/CAC Example: Widget Sales
In this case, CAC > LTV – this is not a profitable customer
COSTS PROFITABILITY
Salesperson Salary: $10,000 / month
Marketing spend: $2,000 / month
The salesperson pursues and closes one customer
(Customer A) a month
Revenue: $20,000 widget
(one-time purchase)
Cost of goods sold: $10,000
Customer support: $2,000
CAC = ($10,000+$2,000) / 1 = $12,000 LTV = $20,000-$10,000-$2,000 = $8,000

10. LTV: The “Lifetime” Assumption is Critical
“Newer customers must remain subscribed for about
4.5 months to [break even]. However, almost 70% of
customers churn by this time… the break-even point
is moving farther away with every new cohort due
to declining revenue and growing CAC for
newer customers”
“CAC per net new customer was $430K last quarter,
and with an average ACV of $66.9K, they need to hold
onto customers for a long time to be profitable…
Given their blended net revenue retention rate was just
above 105% last quarter, lower than most, they need to
spend even more to grow…”
Daniel McCarthy, Emory University Alex Clayton, Spark Capital

11. LTV/CAC
§ LTV measures profitability of a customer, not revenue
§ CAC includes all costs associated with acquiring a customer, not just the
actual ad spend or salaries. This might include:
§ Marketing materials
§ Sales tools (e.g, software)
§ Benefits, travel & expenses, etc.
§ Other overhead assigned to sales & marketing team (e.g. Rent)
§ You should assume that your CAC will only increase over time, as you burn
through enthusiastic early adopter customers and enter more competitve
marketing channels
§ Venture investors usually look to see an LTV/CAC rasio of 3x or higher

12. TACTICS

13. Have a Story

14. Have a Story

15. Make your
product
stand out!

16. Make your
product
stand out!

17. Make your
product
stand out!

18. Be bold
with your
marketing

19. Change the buying criteria

20. Get out there.

21. Try new channels
(that might scale)
Rx Bar

22. Try new channels
(that might scale)
Podcasts
Influencer Marketing

23. Try new channels
(that might scale)
Reddit
Car-Top LED Screens

24. Create a
PR Story

25. Join the
Conversation

26. Play to
your core
customer

27. Play to
your core
customer