Eric Siu explains why marketers waste money: they use one blended customer lifetime value across all channels instead of calculating LTV separately for each one. Google and SEO customers might be worth three times more than Instagram ad customers, but most marketers don't know it.
The number one reason that I see marketers fail with their marketing is not truly understanding the LTV. I don't know what it is, but marketers believe once you get your lifetime value of your customer, and a lot of people actually have the wrong number, but once they have it, they believe, all right, now I can spend up to X dollars to acquire a customer. What a lot of marketers get wrong is when you're optimizing your marketing per channel, the lifetime value of your customer usually is a little bit different per channel as well. For example, we see Google SEO traffic driving a much higher LTV than Instagram. Instagram ads, right? And marketers just take this arbitrary number of their LTV. You mean they blend it? They blend it, but then they're taking this number and they're just like, oh, okay, if our LTV is $500 profitably, we can spend $200 per channel. Yeah. Well, if you're just blending it, but the majority of your customers come from Instagram now instead of Google, and your Google LTV was more like $600 and your Instagram LTV was like $350, you got a problem.
