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 = $$