BRANDing
Push your LTV1
300
%2 higher
than CAC3 with
branding.
1 Customer Lifetime Value (LTV) is how much your average customer pays you over time
3 Customer Acquisition Cost (CAC) is total costs to gain an average customer
2 300% or 3:1 is the ideal ratio of LTV/CAC that gives you enough margin to scale
Customer
Lifetime
Value
LTV
Customer Lifetime Value
Customer lifetime value LTV goes up when you keep customers coming back. Branding makes this possible. Without a uniquely differentiated value proposition wrapped in an enduring brand story, you're just a fungible commodity–easily replaced.
Logic
LTV
Branding can turn customers into subscribers raising customer lifetime value (LTV1) to 3x CAC2 (3:1)
1 LTV = Annual revenue per customer * time retained
Branding can motivate customers to refer more customers lowering customer acquisition cost (CAC2) to 0.33 LTV1 (3:1)
2 CAC = All annual expenses / total number of customers
CAC
Process
“Design-driven companies outperform S&P by 228% over 10 years.” DMI