How do you calculate how much to pay for a customer if you don’t know their lifetime value?

Drop The Mic Show - Ask Russell Anything - Video (Russell Brunson - FunnelHackerTV)

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YouTube Transcript: English (auto-generated)

00:00
hi here we go question number one here
00:02
Arthur
00:03
my name’s Steve Friday thanks for taking
00:08
the question the question is about
00:10
customers and LTV I’ve got a relatively
00:13
new business so I don’t have enough data
00:15
to accurately calculate my lifetime
00:18
value of my customers and so I’m having
00:22
a hard time knowing pain customer what
00:27
my customer for acquisition is how would
00:31
you go about doing calculating how much
00:34
to pay for customer pay traffic right
00:38
now thank you okay all right first off I
00:44
am also jealous that beard I cannot grow
00:46
beard otherwise I would insist I’m Steve
00:47
Kalan we’re live on TV you guys all the
00:50
kids got all the kids here so all right
00:52
so nor anyone answers question ok so
00:54
Steve that’s a great question so as
00:56
question was how do you calculate
00:57
lifetime value if your company’s doing
01:00
your noble at time value select n values
01:01
one of those like dream metrics people
01:03
want to know and they always want to
01:04
talk about I am NOT a big fan of vy x
01:06
value of customer obviously i want to
01:08
make that number bigger but I don’t want
01:10
to base my advertising decisions on
01:11
lifetime value because that might be six
01:14
months or a year from now five years my
01:15
10 years from now and I make my
01:17
decisions based on that it’s hard to be
01:18
profitable lifetime value is a good
01:20
metric if you are working with venture
01:22
capitalists who want to give you how
01:23
much money and hold onto debt and
01:25
hopefully a payoff and like you know
01:26
five years from now on but that’s not
01:29
we’re about down right we’re about
01:30
making money today so what I do I’m not
01:32
looking for lifetime value I initially
01:34
want to be my paid ads I’m looking for
01:36
what’s my a CV my average cart value so
01:40
how much money do I make on average
01:42
every single person who buys one of my
01:43
friend end products okay so for example
01:45
someone buys the expert secrets book I
01:47
know to my cost to acquire customer
01:49
right now about what if I was 11 or $12
01:52
to get them to buy the book but then in
01:54
the funnel in that point of sale the
01:56
breakeven funnel as more in breaking as
01:58
profitable but we’re making about thirty
02:00
two dollars for every single book we
02:02
sell so that’s the metric I’m looking at
02:04
can I know I can spend up to thirty two
02:06
dollars and still breakeven in the car
02:08
so a CV average cart value that’s the
02:11
metric and you focus on and think of
02:13
out while you are doing on while you are
02:17
building your company advertising around
02:19
that I want to break even immediately a
02:21
point of self run advertising if not
02:22
means my funnel is not very good okay or
02:24
some people like to go you know maybe
02:26
seven days or 14 days or six yes
02:30
thirty days sixty days before they break
02:32
even that stresses me out if my phone
02:33
doesn’t break even immediately I stop
02:35
all adds to it and I try to get my
02:36
funnel better so that is kind of my
02:38
recommendation to you Steve that sound
02:40
good all right no he wants out to my
02:41
crop okay nor the mic oh nice let’s get
02:45
down down - drop it drop the mic oh one
02:48
more marketing secret if so then go get
02:50
your copies of my two best-selling books
02:52
book number one is called experts
02:54
secrets and you get a free copy at
02:56
expert seekers calm and book number two
02:58
is called calm secrets and you get your
03:00
free copy at dot-com secrets calm inside
03:03
these two books you’ll find my top 35
03:05
secrets to leave you to become the
03:07
fastest-growing non vc-backed fast
03:09
startup company in the world

DotComSecrets: The Underground Playbook For Growing Your Company Online…

:arrow_right: Get FREE Book Now!

“A simple process that ANY company can use to geometrically improve their traffic, conversion and sales online.” - Tony Robbins