The Dangerous Seduction of the Lifetime Value (LTV) Formula

Many consumer Internet business executives are loyalists of the Lifetime Value model, often referred to as the LTV model or formula. Lifetime value is the net present value of the profit stream of a customer. This concept, which appears on the surface to be quite benign, is typically used to compare the costs of acquiring a customer (often referred to as SAC, which stands for … [ Read more ]

All Markets Are Not Created Equal: 10 Factors To Consider When Evaluating Digital Marketplaces

A true marketplace needs natural pull on both the consumer and supplier side of the market. Aggregating suppliers is a necessary, but insufficient step on its own. You must also organically aggregate demand. With each step, it should get easier to acquire the incremental consumer AS WELL AS the incremental supplier. Highly liquid marketplaces naturally “tip” towards becoming a clearinghouse where neither the consumer nor … [ Read more ]

The One Internet Metric That Really Matters

The conversion rate captures the crucial aspects of a Website. A small increase in it can have powerful effects.