This transcript was generated from the episode audio and may contain minor errors.
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As you go from idea to actual business where you've got customers, you're selling products or services, you're building an email list and maintaining long-term relationships with those subscribers, you wanna know how much money those subscribers are producing. That's what we're talking about today. Ideally, you want a high customer lifetime value, also known as CLV, conveniently an acronym, because you can then spend money to attract more subscribers. It's kind of like achieving a positive ROI, sorry, another acronym, return on investment. It's kind of like achieving a positive return on investment on ad spending from Facebook or Google.
Once you get the formula right, where you are earning more than you spend, even if it's a relatively small amount, you can ramp up and spend more and more. Now that is, of course, the goal. That's the Golden Fleece. Achieving this winning formula is easier said than done, but with customer value, customer lifetime value, it's not about spending, it's about earning. Like how much is each subscriber worth?
So if you have even a single customer, you can focus on this metric. And that's what our listener is wondering about today, how much money can you make per subscriber? Their detailed question and my answer in this episode. [Music]
Hi there, Chris, this is Mackenzie, and I've been listening to the show for a while now. I've heard that when you build up a newsletter list and offer products for sale, an important metric to track is lifetime value per subscriber.
What are some ballpark numbers for this? If I'm able to get 1,000 subscribers to my list, for example, and I sell them products on an ongoing basis, but not too often because I don't want them to get tired of promotions and unsubscribe, what kind of return can I expect? Thanks for your help. - Mackenzie, what's good? Thank you so much for listening.
This is a really smart question. Definitely a good thing to be thinking about as you are growing your business, especially in the early stages, like when you were very first beginning to figure out, okay, if I get subscribers and I'm selling products, what's the conversion rate gonna look like? And do I have any upsells? What's my second product after I've developed the first one? If you're gonna track one metric, lifetime customer value, you can make an argument that that's probably the most important thing to keep an eye on.
So as for what it's going to be for you, what kind of return can you expect? Difficult to answer, right? Because really depends on what you're selling. Like it depends a lot on the products you're selling. If you don't have much for sale, or if your prices are low, it's gonna be hard to have a high lifetime customer value.
Now you can still make money. Like it's absolutely possible to still have a profitable business without a high customer lifetime value. But let me just give you a range, and we'll start at the high end. A friend of mine, Thiago Forte, he has mentioned that he earns something like 41 to $43 per subscriber. Okay, that's really, really good, especially when he's got tens of thousands of subscribers.
But it makes sense because he sells high end training courses that cost at least $1,000 each. And some of them are $2,000, $3,000, et cetera. He's got different tiers, including some high level ones. So most of his subscribers join the list because they're interested in these courses. Like they're not just random subscribers, they have come to join his list because they're interested in those courses.
So very high lifetime customer value there. If you have a customer lifetime value of $8, that's okay, because if you're bringing in 50 email signups a day, let's say, to give another example, it means that every day you're adding $400 in lifetime value to your business. So there's more than one way to win with this kind of approach. The key is to think long term and to do exactly what Mackenzie described, building out a suite of products or services, or both, that can serve customers over time. Also, one more key point.
I've talked about acquiring new customers here, but you can also devote time and attention to increasing the customer lifetime value of existing customers. So if you've got $8 is your number, you're like, "I wanna make it 12." Well, if your email list isn't growing so much, that's another way to increase revenue without necessarily having more subscribers. So there's a lot we could do with this. We might talk about it more in the new year as well, but I think it's an important thing to keep an eye on, especially as you're getting started, customer lifetime value. That's it for today.
Listeners, if you've got a question, sidehustleschool.com/questions. We're working on lots of stuff for next year. I hope you'll join me, but I also thank you for joining me today. My name is Chris Guillebeau. New episode coming out tomorrow.
You're listening to "Side Hustle School." [Music]
from the Onward Project.
