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Based on that coefficient, it has a lot to do with how fast your business grows. And similarly with paid marketing, as you generate contribution margin, you can reinvest that and grow and actually if you link those two up explicitly, it makes it really clear why thinking about something like payback period is a much better measure of paid marketing performance than LTV to CAC because the speed at which you get enough money back to then go acquire another customer has much more bearing on how fast your business can grow than just the raw kind of [inaudible 00:09:39].
“Based on that coefficient, it has a lot to do with how fast your business grows. And similarly with paid marketing, as you generate contribution margin, you can reinvest that and grow and actually if you link those two up explicitly, it makes it really clear why thinking about something like payback period is a much better measure of paid marketing performance than LTV to CAC because the speed at which you get enough money back to then go acquire another customer has much more bearing on how fast your business can grow than just the raw kind of [inaudible 00:09:39].”
- Speaker
- Dan Hockenmaier
- Publisher
- Lenny's Podcast