There’s only a few universal numbers that we’ve seen matter for business.

And If you can calculate them, understand them and make decisions based on them you’ve got a big head-start over everyone else.

These are CAC, LTV and Churn.

They can tell you in three seconds everything that’s right and wrong about your side hustle, Tesla, and your auntie’s market stall.

CAC = Customer Acquisition Cost

LTV = Customer Lifetime Value

Churn = Customer Churn Rate

Let’s use these metrics to compare two businesses.

Business #1

CAC = $1, LTV = $10, Churn = 0%

Business #2

CAC = $100, Churn = 100%, LTV= $10

The first business spent $1 on sales and marketing to generate $10 in revenue.

The second spent $100 on sales and marketing to generate $10 in revenue.

In the first example, they managed to keep their customer for a year.

In the second example, the customer never came back.

Who’s winning, who’s losing?

The more dollars you can earn from a customer for every dollar you spend on sales and marketing, the more you win.

The profit you make per customer is ultimately only dependent on two points. How much you spend to find them and how long you can keep them.

How To Build A $20M Newsletter

Sam Parr is not your conventional entrepreneur you might even call him a rebel. From living on the streets to multiple arrests and problems with alcohol addiction. Building and exiting an 8 figure company is not something his former associates thought likely.

The most important skill Sam learned to build that company was how to write.

How to get your attention, make you care and persuade you to take action.

Here’s how Sam does it;

1. Copywriting is persuasion and the best book you can read to learn this subject is called Influence by Robert Cialdini.

2. Learn the A.I.D.A framework. Sam employs the AIDA framework in virtually every piece of copy he’s ever written. The reason is, to persuade someone to take action, you have to convince them to read what you’ve written. AIDA is a way to lure people down the page so you can start persuading.

3. Care way more about your headline. Almost everyone decides what they’re going to read by the headline. That can be an email subject line, the first line of a FB message or the slogan on your business card.

“On average, five times as many people read the headline as read the body copy. When you have written your headline, you have spent eighty cents out of your dollar.” – David Ogilvy

Sam shared many more valuable insights when he appeared on the Creator Labs podcast and we took notes so you don’t have to listen. Read Sam’s insights here.

The Business Advice Guy Industry

Charlie Munger, the other half of Warren Buffet & Berkshire Hathaway, likes to say, “It’s easier to not be a fool than it is to be cool.”

Like this newsletter and our blog, most ‘business advice guy’ content tells you what to do rather than what-not-do-do.

That’s a problem because many of the ‘what-to-do stuff is either untested, meaning it only works in theory. Or it was tested by someone else under a unique set of conditions, not applicable to you.

That ‘advice’ achieved a result. That could be more to do with dumb luck than anything replicable on average or, worst yet, by you.

Nassim Taleb, a grumpy but wise Lebanese former options trader, would say what-to-do advice is fragile.

Instead, I think the ‘business advice guy’ industry (ourselves included) needs to lean towards robust advice. Resistant to stress tests and living to tell its story.

Like that urge, you get to grab a child climbing up a kitchen stool. Your child or not, you ‘know’ there’s a good chance it doesn’t end well for the child (physical pain) or you (guilt). That urge is robust; it’s a chemical representation of past mistakes, i.e. what-not-to-do.

What-not-to-do is learned more often than theorized. In-grained from repeated infringements by you or martyrs before you. It undoubtedly increases your chances of surviving and others when you pass it on.

History tells us, the next time you get a chance to learn from someone else, your ‘business advice gal’. If you want to increase your chances of survival, start with where they went wrong, not what they got right.

Not ‘how did you get a million followers on Instagram’ but ‘why don’t you use Facebook?’ Not ‘how did you grow?’ but ‘where did you fall?’

As Charlie says, it’s easier to not be a fool than it is to be cool.