Second Order Revenue: Are you cool man?

Fuck yeah you are cool. All the feels are good.

What is second order revenue?

Hold up hold up, young thug.

First, learn the ways of the magical CAC:LTV ratio.

CAC:LTV. Kind of Obsessed.• CAC:LTV is super important.

• CAC: Cost to acquire a new customer.

• LTV: The amount they pay us while they are a customer.

• Getting someone for $1 and having them pay us 4-10x. That’s cool.

• It’s the core of our economics, and it’s what enables us to grow.

I can see clearly now.

Marketing $1

Sales $2

CAC $3

LTV $12

CAC:LTV 1:4

Okay. But what is second order revenue?

MIX IT UP

Shit hot product+

Being awesome+

Showing the love

IT’S ABOUT FRIENDS

IT’S ABOUT PEOPLE THAT TALK ABOUT YOU

Second Order Revenue!

SOR happens when a happy customer (yay CS!) takes you with them (happens 10% of the time).

And / or refers you to a friend (about 30% of these referrals convert). Love that WoM.

That Second Order Revenue, ThoNo Extra Love

CAC $1

LTV $5

CAC: LTV 1:5

Womp Womp :(

So Much Love!

CAC $1

LTV $5

Champion! $5

Referral! $5

CAC:LTV 1:15

Fuck yeah.

Can we create it? Manifest even?

Step 1: We signed Birchbox!

Step 2: Our champions leave. Shit.

Step 3: Our champions bring us with them to their new companies!

Step 4: New champion @ Birchbox upgrades!

Things we do.• We’re crazy in love (with our customers).

• Always build the brand. And stay true to it.

• Treat a potential customer like a customer, and a customer like a potential customer.

• Create strong points of reference.

• Unlimited users and other forms of ‘virality’.

High five dudes.