This YouTube masterclass (Darcy Juarez with Dan Kennedy) contrasts two levers for growing a business: increasing transaction value (the dollar amount per sale) and increasing total customer value (customer lifetime value/stacked future revenue). Dan emphasizes that many owners over-focus on short-term income (covering immediate bills) and retain old survival habits that later hinder scaling and long-term financial solvency. He illustrates with personal anecdotes about exploiting credit float and check-processing quirks, then outlines how transaction unit value (e.g., $20–$25 vs. $75 per customer visit) and maximum allowable cost to acquire a customer depend on those value metrics.
So I got really good at this. It did not distress me. It was sort of modus operandi, you know, and it all, you know, worked until it didn't. But I was so good at that that it was in the way of getting good at making money and being financially sound and solvent. Foreign.
Hello, and welcome to this month's Masterclass. I'm Darcy Juarez here with Dan Kennedy. Dan, this month I wanted to talk a little bit about kind of two ways that we can increase a business, and that's by increasing the transaction value and increasing the customer value. So I want to start off by talking about the owner's options kind of for increasing his business income and therefore the value of the.
So they're two very different things. Present income, future equity, or future value. And most owners get into the habit of focusing only on the first. From their early experience in business was they had. They had no. No space to think about anything but today's income to cover the checks they wrote three days ago. Right. So that conditions them to a certain kind of thought that in many cases they never get rid of long after it's no longer appropriate. We do this with a lot of behavior, by the way, so we have something we get really good at that we needed to be really good at at one point. But then our situation changes for the better in many cases. But we drag along those old skills, and they are now squarely in the way of the next progress and the next leveling up. I was early in my business life, I got super good at living pretty well broke. I mean, I got really good at it. Now, there were things you could do then that you can't do now. For example, credit cards used to be issued by the local banks. And the. The post to the database of the opening of a new credit card was slow. So it went from the local bank to MasterCard or to Visa or to American Express by some mechanism, I have no idea, probably paper. And then they had to get it into their database that the local bank checks when they're deciding whether to issue a credit card or not. Right. So you have a big gap to work with. And so in a given county, because then was county by county, given county. What you understood this. You got to all eight banks the same day, and you opened eight credit card accounts. Right? Now, they never got rejected. At the other end, the bank. The bank's approval was done. All that happened at the other end was the card got sent out and you were in the database. So, I mean, I piled up a lot of credit In a hurry. I mean, a lot I needed it, but. But I piled up a lot. But I just got real good at all sorts of stuff, some of which you can still do, some of which you can't. The code numbers on the bottom of check. If you very carefully take a razor blade and, and, and run it through those numbers, the computer wouldn't process it. I don't know if that's true today or not, but it wouldn't process it. It had, it kicked it out to be hand processed, which would buy you two days, three days, four days float, right? And on and on and on. So I got really good at this. It did not distress me. It was sort of modus operandi, you know, and it all, you know, worked until it didn't. But I was so good at that that it was in the way of getting good at making money and being financially sound and solvent. As an aside, we're witnessing the same phenomenon now with the federal government. So the federal government got so good at operating bankrupt, it invented all sorts of ways to do that, right? Nixon took us off the gold standard. That's where it started. So the government kept inventing ways to be further and further and further in debt and still spend like a drunken sailor on shore leave and buy and pay for anything that they wanted to do. Now a bunch of guys are saying, we're going to take all those skills you got so good at and we're going to forget them. And we're going to use these skills over here which are all about financial solvency. And the beast is going, wait a damn minute, right? So it happens with a lot of things. It definitely happens with this. People get so good at generating the day to day income, meeting payroll, getting the light bill paid, seeing growth. That was their old skill set. That was essential. And it's in the way of a new skill set. So they're two different things. So if you think about income, you're thinking about something controlled by transaction value. Number one, what is the unit of business that occurs worth? So if we go over here behind this hotel to the Wicked Lizard and we have dinner, the unit is probably going to be 20 bucks, 25 bucks maybe, depends on how much you drink. But if we set that aside, it's going to be about 20 or 25 bucks. If we go just six feet down the hill to Delmonico Steakhouse, the unit of business is going to be 75 and going to be three times that amount. Now you have to think long and hard if you want to be in the $25 transaction value business when you could be in the $75 transaction value business. Because it is not three times as hard to fill the place with $75 units of business as to fill the place with $25 units of business. Now, if you're going to open the 3000 McDonald's, that's one thing. If you're going to have three restaurants in your hometown and an adjacent town, that's entirely another thing, right? So transaction value has to be thought about a lot. Then you have total customer value that does control income, although it has more impact on future bank wealth than it does on current income because it stacks year to year to year. And then the last number that relates to income and to these other statistics is your Is your Mac your maximum allowable cost to acquire a customer? Which loops back. If my unit cost value is 75 or my unit value is 25, my total customer value is probably going to be a multiple of each over a period of time. Which means my maximum allowable cost is going to be a lot lower with the 25 multiple than it is with the 75 multiple. Right?
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