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A business that strives for something like this should absolutely be charging money from day one, in order to establish baselines for their two key metrics: CPA (the cost to acquire a new customer) and LTV (the lifetime value of each acquired customer). These concepts have important implications for any lean startup. Expo SF (May.
As the product got better, we could see the rate getting closer and closer to the mythical “ one percent rule.&# Luckily, we also discovered that certain other metrics, like LTV and CPA were much better than we initially projected. The Lean Startup Intensive is tomorrow at Web 2.0. Expo SF (May. for Harvard Business Revie.
In today’s rough-and-tumble startup scene, “lean” is all the rage, and the ability to cut costs without compromising performance is prized above virtually any other managerial competency. ProductDevelopment. Most lean startups simply don’t have the wherewithal to get a dozen consumers in a room somewhere.
You might develop a fairly simple business plan first as you start a small business, and that might be enough for you. This is an excellent use of the Lean Business Planning methodology , based on a simple Lean Plan combined with regular updates and revisions. And you can do a simple Lean Business Plan in less than an hour.
The spread between your LTV and blended CPA determines either your profitability or your rate of growth, and a high valuation depends on balancing these two factors. To the extent that you have good word-of-mouth, activation or retention, these factors tend to drive down your CPA or drive up your LTV, and so are nice bonuses.
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