Understanding the true value of revenue and profit generated is the key to knowing how much to invest in Marketing.
If your LTV of a client is 10 years and you’re not cash strapped, being willing to increase your CAC payback period to 18-24 months can drastically increase your speed to acquire customers.
While financial stewardship is critical to scale, knowing when to step on the gas can lead to significant gains.
This is when Marketing can do things like:
-Building much more brand awareness at the top of the funnel
-Invest heavily in content to generate long-term returns
-Scale paid media to outbid the competition that has more stringent cash constraints
Similarly, realizing that generating EBITDA has a 15x (likely more) multiple on exit / fundraising round can change how you view Marketing investment.
Short-term thinking may view this as conserving EBITDA for higher valuations. Long-term thinking looks at long-term EBITDA creation.
If payback periods are expanded to 18-24 months but you can win a much larger percentage of the market, inevitably EBITDA will increase significantly more than keeping payback periods under 12 months.
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