How to squeeze your business model
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Transcript of How to squeeze your business model
How to Squeeze Your Business
Model for Fun and Profit
NU Supplier Diversity Program Pilot Oct 12, 2011 John Seiffer
Business Model (simplified)
(LTV – CA) *N = $$
WHY?
Take Away #1
Learn the words the customer uses for each of the 2 parts of value
(LTV – CA) *N = $$
LTV = Life Time Value
(LTV – CA) *N = $$
What a customer pays (minus)
What it costs to provide the value they pay for
(times) How often /long they do that
Life Time Value
CA = Cost of Acquisition
(LTV – CA) *N = $$
Cost of Acquisition
Cost of Acquisition
What it costs to convert a leadto a prospect and turn that prospect into a customer.
N = Number of Customers
(LTV – CA) *N = $$
3 Reasons to
Spend• LTV = Providing Value for Customers
• CA = Acquiring Customers
• N = Growth (adding capacity to do either of the above)
Take Away #2
Know WHY you spend $$
Not WHAT you spend it on
(LTV – CA) *N = $$
work
ON
not
IN
your
compa
ny
(LTV – CA) *N = $$
Take Away #3
Work ON your Business to Optimize Capacity
(LTV – CA) *N = $$
• Banks
• Investors
• Royalty
• Credit Cards
• Customers
• Vendors
CA$H
but
not
Money
[(LTV – CA) *N] – PB = $$
Take Away #4
Outside funds are NOT free
Learn to be profitable before you grow.
Summary
• Learn the words your customers use for 2 kinds of value.
• Know why you spend every dollar
(LTV – CA) *N = $$
• Optimize Capacity
• Use Outside Funds at the right time
[(LTV – CA) *N] - PB = $$