A couple weeks ago, in a comment to an MBA Mondays post, Dan Lewis wrote "LTV has to be higher than your CPA or you're not going to make it." I asked Dan to elaborate in a MBA Mondays guest blog post on this topic and he agreed. Here's Dan's post:
LTV stands for “lifetime value” of a customer. CPA stands for “cost per acquisition” of a customer/subscriber. LTV has to be greater than CPA or you won’t be able to scale – or, for that matter, survive. To demonstrate, let’s go to the video tape:
Monday through Friday, I publish a free daily email newsletter (which you can, and should, sign up for), putting to words the notion that you should – and can – learn something new every day. Oddities, like the fact that Abraham Lincoln created the Secret Service the day he was shot, carrots used to be purple, there is only one Jewish person in all of Afghanistan, etc. It has about 4,000 subscribers. It’s basically a blog, sure, but I send it as an email newsletter. Long story; one for another day.
To read the full, original article click on this link: A VC: LTV > CPA
Author: Fred Wilson
