#5 Cost to Acquire New Customers (CAC) and Their Lifetime Value (LTV) with Wilson Hung (Kettle & Fire)

In this episode of the Growth Machine Podcast we are joined by Wilson Hung, the Director of Growth for Kettle & Fire. Wilson wrote a phenomenal tweetstorm and article about the relationship between the cost to acquire new customers and their lifetime value.

Show Notes

Links from the Episode

Mentioned in the show

Articles mentioned

Show Topics

0:41 - How Wilson and Nat new of each other in Sumome’s awesome Alumni network. 30 day strategy proposal to get a new job. Ahrefs and link building with affiliates. Videos and indirectly ranking for bone broth.

3:14 - Saturating growth channels, ads cost started rising. Thought: if customer acquisition costs (CAC) continue to grow, then customer lifetime value (LTV) is the variable to act on to hit the top line revenue targets.

5:25 - Improving LTV. Identifying points of direct LTV improvement (data infrastructure, margins, repeat purchases, etc). Slowing down the rate of increase of CAC (increasing efficiency, diversifying to non-paid acquisition channels, SEO, referrals, etc). Benefits of scaling Facebook Ads when you already have a large audience. When to try non-paid before than paid channels and vice versa.

9:53 - Increasing LTV. Less mature brands tend to measure success only on the first purchase, revenue per visitor or the return on ad spend on the first purchase, vs considering subscriptions. Attention to metrics that aren’t in line with long term goals.

12:08 - Valuing customers differently. Willingness to pay more for a subscriber than a non subscriber. Segmenting customers by the acquisition channel (paid/non-paid). How to build the company’s customer data. Cumulative revenue and blended margins. Cashflow issues if you pick the wrong LTV timeframe. Maintenance and guardrails. Past performance is not a guarantee for future performance. Metrics Wilson receives weekly.

18:55 - Guiding people to subscriptions. Increasing subscription opt-ins at first purchase or at upgrade. How dev agencies come into play to increase subscriptions. Examples of how they are improving opt-ins at K&F. Finding way people subscribe by surveys and identifying potential subscriptors based on keyword search.

22:19 - Developing clever tools for helping do better with LTV. What to focus when sales are in the $10k-$20k range. Tools to optimize for revenue per visitor. Paying attention not over optimizing bundles to break the free shipping barrier, to the point conversion rates start to diminish.

25:52 - Sweet spots with free shipping and pop-up discounts. Understanding the costs of fulfillment. LTV is not just revenue, margins play an important role too. With better margins one can afford more expensive customer acquisition. Margin improvements.

29:25 - LTV and CAC summary.

30:41 - Find Wilson at his website and @.

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Nat Eliason

Nat is the CEO & Founder of Growth Machine.