Unstable scaling is the result of unstable retention.
Your scale is limited by your LTV.
(Here’s why you need to focus on it)
You can’t scale the business till you can safely predict your LTV. Without this, all the scaling efforts will fizzle out.
Most brands try to scale prematurely.
Scaling doesn’t only mean scaling marketing budgets. Scaling means generating more from same resources. That include –
- Generating more from existing customers.
- Delivering more with existing team.
- Using same infrastructure and so on.
Brands trying to scale with short-term metrics like AOV or monthly MER miss out on the bigger picture.
Platforms will keep on changing. Your monthly MER will keep on changing. You can’t scale solely based on that.
LTV allows brands to invest more confidently in customer acquisition, knowing that the long-term value will justify the cost.
Without a focus on LTV, scaling becomes unsustainable.
LTV helps you predict your future revenue.
For building consistent predictable revenue, focus on –
- Subscription/loyalty programs
- Personalized post purchase communication with cross sell/upsell offers
- Building emotional loyalty with mission/community/strong brand
You can always acquire more customers. You are not limited by budget.
But your scale is limited by your ability to generate consistent revenue from acquired customers.