Oct 21, 2023
The first law of your business or your company

The essential thing in a company is to find not only a value proposition. But also an adequate growth machine. Which is obtained when, as happens in WHATSAPP. Users arrive at zero cost and thus there is  much less rush to generate income from them: “ We will take money from the users, even if it is little. When there are six hundred million.”

You must be critical of the economic foundations The first of your idea. And know the cost of acquiring clients who will pay for your service . You have a viable business with growth potential when the “customer acquisition cost. Or customer acquisition cost is lower than the “customer lifetime value .

Getting a new customer should The first

Cost less than the money you will get from that customer for as long as they remain a customer. Which in turn depends on how much you sell to them. At what margin, and how much they repeat. On the Internet, the difficult thing. What most projects tend to fail at, is to acquire clients at a reasonable cost. And  not underestimate that acquisition cost.

The usual business models based on the accumulation of a very large. Database of users are not disturbing in themselves. But it is often forgotten that if their cost is greater than executive email list zero. No matter how low, and they do not get anything out of customers , Instead of a treasure, instead of a growth machine, instead of an investable business, they are simply bottomless pits, in which the more money you put, the more money you lose.

The above “can be accomplished in three ways :

With a low or no customer acquisition cost, with a high lifetime value or ,  ideally, with the sum of both factors. At the zero cost extreme are, for example, Facebook or Twitter; On IS Lists the opposite, Amazon, which does have a high customer acquisition cost but has a much higher lifetime value than those.

There are many businesses that are paying to acquire a network of clients or users, but without getting anything out of them or yet knowing how they could do it.

 

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