0:00

Our friends over at App Sumo

0:03

started with one simple idea.

0:05

The tools you need to

0:07

grow your business shouldn't put

0:09

you out of business. That's

0:11

why they work directly with

0:13

developers to get exclusive discounts

0:15

of 80 to 90% off

0:17

software, saving entrepreneurs like you

0:20

over... half of a billion

0:22

dollars since 2010. Some of

0:24

the biggest names in tech,

0:26

like Mailchips, Zapier, Dropbox, all

0:28

got their start on AppSumo,

0:30

and with a rotating selection of

0:32

hundreds of tools, the ones that

0:34

you're using anyway, and probably paying

0:36

too much for, you'll find all

0:39

the software you need to make

0:41

your life easier in 2025. With

0:43

a 60-day moneyback guarantee, you can

0:45

try any tool risk free. Oh

0:47

my god, what a deal. Apsumu

0:49

rarely offer his discounts, but they

0:51

are going to offer a deal

0:53

here for you, the professional traffic

0:55

listener, because prices are already so

0:57

low, but we got the biggest

0:59

desk count we could possibly

1:02

get from them anywhere. You get

1:04

13% off your first order with

1:06

the code. traffic 13. These guys

1:08

have been saving entrepreneurs like you

1:10

and marketing people like you, hundreds

1:12

of millions of dollars since 2010,

1:14

don't miss out right now because

1:16

they don't offer discounts like this.

1:19

Head on over to appsumo.com, enter

1:21

the code traffic 13. You get

1:23

13% off your first purchase at appsumo.

1:25

Hey, it's Ralph here. Let me

1:27

tell you about a lifestyle brand

1:30

that we recently worked with where

1:32

they grew their revenue by 49.8%

1:34

year over year and hit eight

1:37

figures in top line revenue for

1:39

the very first time in their

1:41

history. And they are now on

1:43

track for 25 million in revenue.

1:46

in 2025. We're so excited to

1:48

be working with this company. And

1:50

the reason why is they started

1:52

using Tier 11 Data Suite about

1:55

a year ago. It reduced

1:57

their unattributed traffic by 90%.

2:00

right. They're unattributed, direct, unknown traffic

2:02

that probably frustrates the hell out

2:04

of you over in GA4 or

2:06

one of those other crappy attribution

2:09

tools. We reduced that unattributed traffic

2:11

by 90% uncovered $850,000 in hidden

2:13

revenue and scaled their ad spend

2:15

by over 3X. These results are

2:17

not magic. The results of clean,

2:19

accurate data and a system designed

2:21

for today's privacy world where everybody

2:24

is trying to block your data.

2:26

If you want to see these

2:28

kinds of results for your business.

2:30

reach out and let's make it

2:32

happen over at tour11.com/apply and discover

2:34

how tour 11 data suite can

2:36

finally allow you to scale your

2:38

business acquiring new customers at a

2:41

cost you can afford. Head on

2:43

over to tier11.com/apply. Hello and welcome

2:45

to the perpetual traffic podcast. This

2:47

is your host Ralph Burns, founder

2:49

and CEO of Tier 11. And

2:51

today's show, I absolutely love these

2:53

shows. The reason is it's like

2:55

these shows are the reason why

2:58

we do what we do. Not

3:00

only Tier 11 as a digital

3:02

marketing agency, but also just do

3:04

this podcast every single week, because

3:06

I love going deep in businesses

3:08

and really understanding business models. what

3:10

the problem of those businesses are,

3:12

how they can be solved, digging

3:15

underneath the surface a bit, getting

3:17

into the numbers, getting into the

3:19

raw materials that really make a

3:21

business move forward. And today's show

3:23

is all about just that. This

3:25

is actually a client that is

3:27

a new client of Tier 11.

3:30

And the reason why we can

3:32

use these is because obviously we

3:34

keep everything confidential, especially for the

3:36

guys that are on today's show

3:38

here today. As much as we

3:40

possibly can, we do need to

3:42

keep the financials and the details

3:44

of the business confidential to you,

3:47

the listener. However... is a great

3:49

way for you to really look

3:51

at your own business and or

3:53

put under the microscope your agency

3:55

or your internal team as to

3:57

whether or not they're doing this

3:59

type of due diligence prior to

4:01

them doing anything with you. Meaning

4:04

do they understand your numbers? Do

4:06

they understand the numbers behind what

4:08

makes your business go and the

4:10

number that will help you and

4:12

the metric that will help you

4:14

achieve? your big goal for your

4:16

business and ultimately achieve your vision

4:18

as an organization. In today's show

4:21

we're going through a very unique

4:23

business model with some guys who

4:25

are probably some of the smartest

4:27

marketers I've ever met and I

4:29

do not say that lightly. Costam

4:31

used to say everyone was the

4:33

smartest marketer has ever met and

4:36

it's actually not true in many

4:38

cases but these guys are really

4:40

very brilliant and have a unique

4:42

business model. So it's got a

4:44

little bit of something for everyone

4:46

here. If you have a membership

4:48

site, if you sell digital products,

4:50

if you sell community, there's a

4:53

little something for you in here

4:55

because that's part of their business

4:57

model. The other part is an

4:59

e-commerce store. And believe it or

5:01

not, like the way that their

5:03

model works, it's fascinating because they

5:05

utilize the community in such a

5:07

unique way in order to... enrich

5:10

the community through their e-commerce purchases.

5:12

And I think that's one of

5:14

the things that I love about

5:16

it. They also have a really

5:18

strong vision and really cool and

5:20

smart guys here. So today's show

5:22

is about NCAC. And if you

5:24

don't know what NCAC is, or

5:27

if you don't know what NCAC

5:29

is, or if you don't know

5:31

how to calculate it, we'll have

5:33

a solution for you. What are

5:35

you willing and able to pay

5:37

to acquire a new customer? And

5:39

that is the biggest question that

5:42

we oftentimes get. It's the one

5:44

that stumbles a lot of businesses.

5:46

So we do a lot of

5:48

due diligence, which you're gonna see.

5:50

here on today's show, make sure

5:52

that you do head over to

5:54

our YouTube channel and check it

5:56

out there. A lot of it,

5:59

like I said, it's gonna be

6:01

blurred out because a lot of

6:03

this information is confidential. However, it's

6:05

gonna be really instructive for you,

6:07

the business owner, to be able

6:09

to do the same thing for

6:11

your business and bonus, bonus alert,

6:13

the calculator that we use, which

6:16

we have perfected through dozens of

6:18

calls like this. They're now giving

6:20

it away to you, the perpetual

6:22

traffic listener. So as you are

6:24

listing today head on over to

6:26

tier 11.com/Ncac will also put it

6:28

on perpetual traffic.com/Ncac at some point

6:31

but go to tier 11.com/Ncac because

6:33

it is a calculator that I

6:35

think will really help you and

6:37

you'll see how we actually use

6:39

it by using. Figuring out LTV,

6:41

figuring out cogs, figuring out a

6:43

contribution margin, projected profit margin, all

6:45

the other things, obviously factoring in

6:48

operating expenses. And then what our

6:50

solution for that is, is paid

6:52

traffic in this particular case. And

6:54

we arrive at that in-kick figure.

6:56

So we do cut this off

6:58

short at the end where we

7:00

get into some very in-depth details

7:02

about like how to churn, how

7:05

to scratch that. on how to

7:07

solve their biggest issue past NCAC,

7:09

which we won't be getting into

7:11

in today's episode. But that conversation

7:13

is something maybe will err at

7:15

a later date. And I know

7:17

it's something that is probably a

7:19

problem for many of you business

7:22

owners, which is how do you

7:24

keep your customers long term buying

7:26

from you and then become brand

7:28

ambassadors for you. And that's what

7:30

we discussed on the last half

7:32

of the call, which we do

7:34

not err today. We will. Figure

7:37

out a way to air that

7:39

at a later date. So without

7:41

further ado, make sure that you

7:43

do download the NCAC calculator free.

7:45

All you need is your name

7:47

and email over at tour11.com/NCAC. That

7:49

is N-C-A-C, if you don't know

7:51

how to spell because I'm not

7:54

a very good speller myself. But

7:56

without. Further to do, we are

7:58

going to take it over to

8:00

John Moran, who is our chief

8:02

strategist, been on perpetual traffic plenty

8:04

of times here, as well as

8:06

our Ninja team of Nick Miller,

8:08

who is our media buying, director,

8:11

as well as our sales guy,

8:13

TJ, who didn't even realize who's

8:15

going to be the star of

8:17

this week's show, but here he

8:19

is with John and with Nick,

8:21

and our mystery business guest. So

8:23

take it away, guys. Hope you

8:25

enjoy today's episode. We'll talk to

8:28

you on the other side. You're

8:30

listening to perpetual traffic. All right, so

8:32

Ralph, thanks from jumping on. We figure

8:34

we can get started here and take

8:37

us through something. So I have some

8:39

slides on kind of ads account review,

8:41

sort of general hygiene, best practices. So

8:43

I will absolutely send those over. We

8:45

can take a look today, but I

8:47

think honestly, the real info is going

8:49

to come from John and Nick. I'll

8:52

get out of the way and let

8:54

these guys kind of run the show

8:56

here. So John, if that's all right,

8:58

I'd love to start with you and

9:00

I can kind of fill in the

9:02

last couple of minutes with the account

9:04

review stuff. where and when and how

9:07

the ads dollars are spent is spent

9:09

profitably before we find out two, three,

9:11

six months later that, oh man, that's

9:13

this whole thing, we lost $10,000. Like

9:15

that's fairly common. Paid media is the

9:17

most effective way at growing a company,

9:19

but it's also the most expensive. And

9:22

it's something that has to have a

9:24

really good deal of thought and preparation

9:26

put into it before a proper strategy

9:28

can be developed and then even more

9:30

properly measured. So we're going through the

9:32

customer LTV Lifespan Cogs worksheet, also the

9:34

customer acquisition worksheet. I have a couple

9:37

of questions, and I know that TJU

9:39

and I were discussing how updated this

9:41

is. I was going to share a

9:43

screen for a moment. Is this part

9:45

here, the 1A, is this completed? Next,

9:47

this is the one that you had

9:49

provided for, so you want to. Okay.

9:52

Yeah. Let's start by this. This one

9:54

here, this is from the Shopify store.

9:56

This is for. got purely Shopify data

9:58

for e-commerce. And then, you know, the

10:00

first tab there, we have a LTV

10:02

from SamCout for subscriptions of $124. That's

10:04

the first tab there. But. can probably

10:07

you know the first time ignore the

10:09

cogs and any of the other numbers

10:11

there so. Oh that when you and

10:13

I spoke last via email about getting

10:15

cogs for the ecom side that was

10:17

something that your team is still working

10:19

on so we've got so so early

10:22

I think version of these numbers but

10:24

to my knowledge there's some of that

10:26

we're still waiting on from your side

10:28

is that right? Yeah that's right be

10:30

a big help there and he had

10:32

a baby about four days ago so

10:34

things are a little slower. Yeah, yeah,

10:37

he has a slip and four days

10:39

too. It's awesome. So the last kind

10:41

of takeaway that we had, you know,

10:43

provided, again, it's early, right, but we

10:45

said that we're looking at basically ways

10:47

to grow the e-com side of the

10:49

business profitably for a peer revenue stream,

10:52

basically, as a separate kind of initiative

10:54

from club memberships, like we talked about.

10:56

So, John, as we kind of go

10:58

through these things, right, keeping these. in

11:00

mind obviously there's a lot of overlap

11:02

here and ultimately it's the same P&L

11:04

but we do separately you know kind

11:06

of separate lines of business here that

11:09

each have their own numbers to work

11:11

through and so on. Yeah just for

11:13

us like the flow is always membership

11:15

first. The e-commerce business doesn't work without

11:17

the digital membership. We always look at

11:19

the the LTV of a member over

11:21

like a new customer on shot effect.

11:24

Okay got it got it got it.

11:26

I think that that's this part here

11:28

that we didn't have yet. Was that

11:30

right? That was a subscription portion? Correct.

11:32

Yeah. So we have the average OTV

11:34

for a subscriber that we have and

11:36

this is going back from data for

11:39

all years for the day that we

11:41

have in Sam cart is we have

11:43

$124 average LTV. Okay. Cost for the

11:45

digital products, however, cost for the membership

11:47

is one thing we were a little

11:49

unclear on. Is that right? Yeah, well

11:51

the cogs obviously know with the digital

11:54

product the cogs there's not going to

11:56

be cogs that move in the same

11:58

way as the cogs for e-commerce, but

12:00

watching the previous calls there are production

12:02

costs involved with delivering the digital content,

12:04

the subscriptions. So that's where on the

12:06

previous call you mentioned a number of

12:09

$50, as you said, that's about what

12:11

the acquisition cost should be for a

12:13

new member. And you know, combined with

12:15

that, there is usually the new members

12:17

will The NAOV for new members will

12:19

be around 170 when they, you know,

12:21

they buy the VIP package. Some of

12:24

them will buy the 12 month membership,

12:26

some will buy the monthly membership, but

12:28

on average that's going to be $170

12:30

when you include the e-commerce products they

12:32

buy. But that's where suggesting an NCAC

12:34

target for new members, that's where, you

12:36

know, we want to just give a

12:39

little more clarity there and be confident

12:41

if we're going to set a number

12:43

that we're going to use as our

12:45

target, that's going to be profitable because

12:47

there's always going to be upward pressure

12:49

on cap as we scale. So we

12:51

want to make sure we, you know,

12:54

we know that ceiling. I understand. So

12:56

that 124, that was the e-commerce TV

12:58

of members strictly on the Shop Fice

13:00

side. So then kind of what you're

13:02

saying when you take in the air.

13:04

What I'm looking at, I'm looking at

13:06

Samcat right now, it's saying the average

13:09

LTV and this is just revenue from

13:11

SamCarp, which I'm assuming is only from

13:13

the digital products, that that LTV is

13:15

124. You want to share that, Nick?

13:17

Yeah, I'm just just sharing the screen

13:19

right now. Just looking at SamCarp, and

13:21

this did not change when I, you

13:24

know, when I, even when I went

13:26

to all-time, this lifetime value is still

13:28

going to show up here as 100,

13:30

you know, 124. So that's for the

13:32

membership site plus anything they buy an

13:34

e-24 LTV. Yeah, there's no just membership.

13:36

Just membership. Okay, got it. And that's

13:39

awesome to know. Yeah, there's no really

13:41

cogs on membership, right? That's what Nick

13:43

was kind of explaining is basically just,

13:45

okay. Now, then my question for that

13:47

would be here. This customer out of

13:49

TV and Lifespan and Shopify, I have

13:51

accounts that I work with that have

13:54

the subscriptions show up in Shopify just

13:56

differently and some that do not. Do

13:58

we know if this spreadsheet here of

14:00

the South Strong customer out of TV

14:02

Lifesman and Cogues worksheet, if this is

14:04

including digital and tangible scues? So there

14:06

was a period where we were getting

14:09

subscriptions on Shopify through recharge. I know

14:11

there is some recurring subscription revenue there,

14:13

but for the most part a majority

14:15

should be just physical products. Is that

14:17

something we could filter by time read

14:19

that stopped in 2022 or something like

14:21

that and we can go and export

14:23

based on that? Yeah, I could get

14:26

you those days. Okay. Yeah, because I

14:28

was looking at the kind of total

14:30

amount spent per order just looking at

14:32

average AOV. It's about $52 dollars and

14:34

$21 from this worksheet. What is nice

14:36

though is the total amount spent on

14:38

average of that $52. total amount in

14:41

AOV. If we look at the total

14:43

amount spent going all the way from

14:45

infinite lifespan days to recently, it's 265

14:47

days. So what's nice about that is

14:49

the average LTV in terms of just

14:51

the dollar amount going all the way

14:53

back to 2022 is 265. So my

14:56

curiosity was looking through here and saying

14:58

if it was 265, I didn't know

15:00

if it would show up in here.

15:02

They didn't quite jive together. And so

15:04

I'm trying to identify the differences so

15:06

I can perform a proper technical analysis

15:08

on the financials. Nick, this for it

15:11

right here of the average customer lifespan

15:13

in 12 months. Is this just as

15:15

a benchmark or is it like? Yeah,

15:17

no, this is this is purely taken

15:19

from, so using the. And payback. Customer

15:21

cohorts. Yeah, okay. And then, yeah. And

15:23

just one other thing, that five percent

15:26

other costs, the optics, agency fees, that

15:28

was me just. Put in button. Yeah.

15:30

Perfect. Okay, so if we have an

15:32

average of cogs of 50 and a

15:34

max level percentage of end-refer paid media

15:36

45% essentially what we're looking at is

15:38

First, a NCAC target and then comparative

15:41

to LTV, and then we simply just

15:43

overlay our percentile of gross and net

15:45

profit. It's a very, very, actually simple

15:47

equation. So what we'll be tracking in

15:49

perpetuity in scale, obviously there's a few

15:51

things we'll be tracking, everything we'll be

15:53

tracking, but what we'll be focusing on

15:56

is targets, our cost required first-time customer.

15:58

the returning customers, the subscribers, those are

16:00

things that we don't want to continuously

16:02

pay for or overspend on. We do

16:04

want to focus on a scalable volume,

16:06

but at a ceiling or below NCAC

16:08

target. So what we're looking at from

16:11

an example here, not an example, but

16:13

we have the metrics so far. We'll

16:15

just want to iron them out after

16:17

we agree that these are the metrics,

16:19

is if we have a Max allowable

16:21

and CAC of, you know, there are

16:23

26445056, this is our profit payback model.

16:26

It's essentially a CAC payback. And what

16:28

a CAC payback basically means is if

16:30

I spend $25 and I get a

16:32

customer. maybe that sale was $50 and

16:34

we technically lost six bucks on the

16:36

first sale. But they're on subscription and

16:38

there will be LGBT and there will

16:41

be growth. So in the first month,

16:43

if we basically say, hey, we have

16:45

$26 and we made $26 and that's

16:47

our gross profit, like it's a break

16:49

even, it's a free customer. That is

16:51

typically how we'd like to look at

16:53

things at scale because it turns into

16:56

what they call just a media efficiency

16:58

ratio compounding success, which means as we

17:00

always gain new customers, we will always

17:02

be able to benefit from the returning

17:04

sales that they make with us, but

17:06

without having to pay for it in

17:08

perpetuity. So this is an example, I'm

17:11

an account that I've done this with

17:13

for a few years. I'm going to

17:15

use what I would consider an inferior

17:17

third party metrics tool, but it was

17:19

one from like four years ago and

17:21

they just haven't got it off on

17:23

the date of sweet yet. But this

17:25

is something that I would like to

17:28

just share as a quick example so

17:30

you can kind of see visually how

17:32

this looks when it's executed. We had

17:34

an NCAC target of this client of

17:36

about $10 all inclusive. like Amazon everything

17:38

is a cost for a quiet first-time

17:40

customer $10 or less. So it's going

17:43

from like February to February last year.

17:45

We can see that we've kept our

17:47

NCAC within 7.9% of our goal right

17:49

within that $10 range. That's when we

17:51

get a free customer. Now we scaled

17:53

up. a bunch, like 60% scale of

17:55

66 million, which obviously yes, like while

17:58

it's raising scale, this is not like

18:00

everybody gets this when they come here.

18:02

We spend a hundred million dollars a

18:04

year. This is just a very large

18:06

company, well established, but the growth and

18:08

the tracking is what allows us to

18:10

make very educated decisions on where it's

18:13

placed at spent. So as an example,

18:15

when we're looking at our NCAC target,

18:17

as long as our top line is

18:19

here, I don't mind if Facebook says

18:21

50 and Google says 27 and whatever

18:23

it is, we focus on that top

18:25

line metric. That is your bank account

18:28

essentially. And when we go into the

18:30

report here, which will... have instead of

18:32

data suite, but we're looking at just

18:34

a profitability report. That's only going one

18:36

month. That's perfect. This may take like

18:38

a half a second to load, but

18:40

it is important for me to share

18:43

with you. The compounding success year over

18:45

year, when we're looking at our NCAC

18:47

target, it can be as profitable or

18:49

maybe in the negative as we allow.

18:51

It depends on how much time we're

18:53

willing to wait as scale for that

18:55

money to come back in. Month one,

18:58

if we get 100 free customers, month

19:00

two. 25 of those return, that is

19:02

where now that is going to kind

19:04

of grow in perpetuity. So that NCAC

19:06

target is extremely important because if we

19:08

do get that wrong and we scale,

19:10

we're losing money at a faster rate.

19:13

So this is where we look at

19:15

our profit per due customer, you can

19:17

see it's like a couple dollars here

19:19

and there. But over time, now our

19:21

repeat customer sales every day is 80

19:23

to 90,000. This has taken about four

19:25

years to get there, but we wake

19:28

up and there's 100 grand before we

19:30

even start a turn on a campaign.

19:32

So that's how we kind of have

19:34

to think about the growth of this.

19:36

So we're looking at this here. This

19:38

would be a fairly aggressive NCAC target,

19:40

like $26 for a new customer all

19:43

in everything. That will be profitable month

19:45

one. My thought process is we'd probably

19:47

want to live. in a comfortable area

19:49

somewhere in between here is my suggestion.

19:51

I'm gonna pause here and see if

19:53

there's any questions. I go too fast

19:55

a lot so I want to just

19:58

pause and see what questions you have

20:00

so far. No, all good and makes

20:02

sense. So this chart here, I just

20:04

want to make sure when we say

20:06

customer, like this is also including a

20:08

digital membership. Yeah, and that's why I

20:10

just want to make sure Nick, this

20:13

is including digital membership. Well, this here

20:15

was actually... purely shopify data. So okay.

20:17

Yeah, and there could be some could

20:19

be not but we'll add to it

20:21

Let's just say this number changes by

20:23

five bucks as an example after we

20:25

had membership That would be okay. Our

20:27

LTB will be higher our lifespan will

20:30

be higher Our lifespan will be longer.

20:32

This can be higher for longer. But

20:34

that's kind of what we'll want to

20:36

get to is hopefully what we can

20:38

do from this meeting is here if

20:40

that number is that Am I happy

20:42

with that? Can I sustain that? That's

20:45

kind of the decision that we kind

20:47

of have to make from a financial

20:49

standpoint. And John, is it worth, and

20:51

maybe you've got an opinion on this

20:53

too, is it worth having a version

20:55

of this that includes when members purchase

20:57

through the ecom store versus if there

21:00

are non-members purchasing and what an NCAC

21:02

target would be for somebody who all

21:04

we need them to do is buy,

21:06

you know, for example, that's all we're

21:08

asking to do here by way of

21:10

NCAC, as opposed to the members who

21:12

are much more common, if I understand,

21:15

they're the ones mostly purchasing through the

21:17

store now. Right. They're the ones shopping

21:19

in the store. But if we were

21:21

to expand that, he's already said a

21:23

few times, we've got it to the

21:25

notes here as well, that that is

21:27

the primary goal is memberships. However, if

21:30

there is this sort of secondary of

21:32

just getting ecom customers, sounds to me

21:34

like they would have a separate set

21:36

of calculations for things like NK, NK,

21:38

NK, Target, LTV. So do you separate

21:40

those out and have one with and

21:42

one without here or how those things

21:45

sort of fit to sort of fit

21:47

together to fit together here here here

21:49

here? opinion and just let me know

21:51

if you guys would agree. It is

21:53

common to get a person that has

21:55

an e-commerce sale that then comes back

21:57

and signs up for membership that has

22:00

nothing to do with paid ads. The

22:02

pay ads brought to e-commerce sale, but

22:04

very little to actually bring it across

22:06

the finish line for a subscription. If

22:08

we optimize the structure a bit more,

22:10

for example, some simple CRO, ad copy,

22:12

featured benefits, Ben Franklin clothes, and ad

22:15

copy, etc. If we start to push

22:17

membership and we start to see our

22:19

membership increasing and that will have an

22:21

effect of a higher LTV. So we

22:23

can kind of see because those things

22:25

may move in and out quickly person

22:27

we get a membership they can't some

22:30

membership put them they buy from skews

22:32

or they come in from skews and

22:34

they switch to membership it will maybe

22:36

a little bit difficult to say hey

22:38

this is one path that's another path

22:40

I would imagine those two paths cross

22:42

very often would that be true? Yeah

22:45

absolutely we do not have much revenue

22:47

from non-members and we have you know,

22:49

an opportunity where we have 30% or

22:51

40% of our current members who are

22:53

not yet customers from this. So I

22:55

kind of focus as of late. So

22:57

it definitely starts with memberships and then

23:00

flowing into customers. Now we would love

23:02

to know because we can get customers

23:04

pretty cheap, like non-member customers, you know,

23:06

through free plus shipping, 50% off deals,

23:08

like we've done that pretty well. haven't

23:10

been able to do it necessarily profitably

23:12

like immediately. But what we'd love to

23:15

see is we've always looked at it

23:17

from a profitability standpoint and not like

23:19

what is the LTV of that customer

23:21

60 days, you know, the other day

23:23

becoming members. Should we look at them

23:25

as more of a customer acquisition versus

23:27

trying to make profit on that? So,

23:29

and that's a big question for us.

23:32

Yeah, a question. What's the e-commerce site

23:34

built with? Yeah, Shopify. Is Shopify. One

23:36

thing that we could do, I think

23:38

I have... So I own a company

23:40

called Bully Sticks Central. We sell dog

23:42

shoes. It's a small pet project. But

23:44

I want to share something with you

23:47

that I think could be helpful. There's

23:49

a tool called Buy the Numbers. It's

23:51

like $12. And we don't pay for

23:53

it anymore. We need it for like

23:55

three months, and then we got rid

23:57

of it. But we still have the

23:59

free version. One thing that is nice

24:02

is if we look at like last

24:04

30 days, that kind of stuff, what

24:06

we can actually do in this is

24:08

go into the preset set. We had

24:10

to play via for a bit and

24:12

now we're moving to a hub spot.

24:14

Oh, I think this integrates a hub

24:17

spot. I'd look into it. But one

24:19

thing that this machine does very well,

24:21

and this is kind of like a

24:23

bonus since like 12 bucks, is... It

24:25

gives you these preset segments that help

24:27

with your targeting and your segmentations for

24:29

those type of communications. So, for example,

24:32

this is just the standard ones that

24:34

give us words like dormant customers at

24:36

risk. So people who purchased, you know,

24:38

that kind of stuff. I'm not saying

24:40

the membership would be here, but the

24:42

members would be here, you know, that

24:44

kind of stuff. I'm not saying the

24:47

memberships would be here, like, purchase, would

24:49

be the like, you're customers, 12 months

24:51

ago, and will likely churn. So they

24:53

purchased. you know, basically every week, so

24:55

that it just dumps in all those

24:57

people and you put them on a

24:59

drip campaign of like the features of

25:02

benefits of a membership and how they

25:04

can actually get cheaper. I don't know.

25:06

We're just spitballing here. But for 12

25:08

bucks and you get, I mean, there's

25:10

I think 40 of here, I mean,

25:12

there's I think 40 of them in

25:14

here, I mean, there's I think 40

25:17

of them in here, I mean, there's

25:19

I think 40 of them in here,

25:21

I mean, I mean, I mean, I

25:23

mean, I mean, and you get, I

25:25

mean, I mean, I mean, I mean,

25:27

I mean there's, I mean, I mean,

25:29

I mean, I mean there's, I mean

25:32

there's, I mean there's, I mean there's,

25:34

I mean there's, I mean there's, I

25:36

mean there's, I mean there's, I mean

25:38

there's, I mean there's, I mean there's,

25:40

I mean there's, I mean there's, I

25:42

mean I think right now would probably

25:44

want to have a very very tight

25:47

focus on subscribers. That I think is

25:49

pretty much our only thing that we

25:51

should focus on and measure. The skew

25:53

customers I think are going to be

25:55

too expensive to go after a paid

25:57

media. I call them skew customers with

25:59

product I would call, but the customers

26:02

I think from a holistic standpoint about

26:04

going after a large portion of those

26:06

people in my opinion is not necessary.

26:08

really where our focus should be at.

26:10

That's kind of uncontrollable for MRR and

26:12

even ARR for growth. So thinking that

26:14

if we were looking at an NCAC

26:17

target for simply subscribers or new customers

26:19

that have a subscription, have not a

26:21

subscription. One thing I did want to

26:23

share with you. This is a data

26:25

suite feature, but I do want it

26:27

to be at least share with you.

26:29

So are you familiar with data suite?

26:32

I know by this first time meeting.

26:34

So John, assault strong. They're actually already

26:36

on wicked. Oh, perfect. Yeah. Cool. So

26:38

this data suite then essentially add on,

26:40

bolt, benefit, etc. I think is extremely

26:42

important just because you're familiar with CAPI.

26:44

So CAPI is an offline import into

26:46

a paid channel. So what that means,

26:49

I'll use my. Again, it's another company

26:51

I'm involved with. I always share data

26:53

kind of from companies that I'm working

26:55

with that I have connectivity stakes so

26:57

I can, there's no issues there. But

26:59

the company here, what we really needed

27:01

to focus on was a new customer.

27:04

This is two ways that we do

27:06

this with Data Suite, both on the

27:08

Google side and on the meta side,

27:10

and those are primarily our first areas

27:12

that we would attack, is when we're.

27:14

training those algorithms or training those pixels

27:16

with the conversion action. We're trying to

27:19

have it focus on a particular audience.

27:21

And so the new customer or new

27:23

subscriber is something that can be imported

27:25

into both meta and Google in order

27:27

to train its models to focus on

27:29

those people. So that as we look

27:31

at all of our purchases we see

27:34

that we have 4600 purchases but 4200

27:36

them are new. This is going to

27:38

be extremely important, especially with your audience

27:40

that does flip-flop and people that are

27:42

on subscribers are buying and that gets

27:44

very messy when we clump those two

27:46

together inside the paid media platforms. That's

27:49

where most companies actually fail at scale,

27:51

that's because they're dumping in a lot

27:53

of money paying for just simply the

27:55

activity of their member base. And it's

27:57

just showing up as row as and

27:59

it looks fantastic because they're your customers,

28:01

they're warm people. So this is just

28:04

a quick side note that I think

28:06

that this is something that is already

28:08

integrated into the wicked functionality is just

28:10

a feature of data suite. So that's

28:12

something that we really need. So we're

28:14

looking at NCAC targets. I know that

28:16

our cost required first time customers 190.

28:19

This is also on a subscription model.

28:21

We actually started this in December 1st.

28:23

So we stuck a new customer acquisition

28:25

goal on here and then started to

28:27

scale it. But when we're focusing on

28:29

those. subscriptions. This one is in recharge.

28:31

Before we focus on, we could not

28:34

make any sort of headway. We had

28:36

an aspen and things just kind of

28:38

ebb and flow. Once we install data

28:40

suite to count for those new customers,

28:42

the new subscribers, that's all we're paying

28:44

for now is or all we're really

28:46

tracking is the cost of those new

28:49

customers. They're expensive for us. They're like

28:51

$195 in joint medications for dogs. So

28:53

it's a little difficult. The analytics though

28:55

show that after doing this So we

28:57

started this December 1st, I'm just going

28:59

to go back like the last 12

29:01

months as an example. And then let's

29:04

turn off the comparison. We'll see the

29:06

whole line there. But this is going

29:08

back all the way from like February

29:10

26th. We can pretty much go back

29:12

to even like last year if we

29:14

wanted to. But this is one of

29:16

the things I think is extremely pivotal

29:19

in these types of markets is because

29:21

we can have this kind of slow

29:23

growth right here and then we kind

29:25

of stagnate. And then once we start

29:27

optimizing for new customers, that's our active

29:29

subscribers just continually going up. And this

29:31

is just from December. The reason why

29:34

we're able to do that is we

29:36

were able to increase this by about

29:38

732 grand since December 1st. We were

29:40

able to pump, you know, a whole

29:42

bunch of money into this thing, go

29:44

from 25 to 800. And that's seeing

29:46

the cost for a first time purchaser

29:48

go down. So that's kind of how

29:51

this operates is. We focus on NCAQ

29:53

targets of the subscribers at a profitable

29:55

level. We know our NCAQ targets and

29:57

NCAQ payback models. You're agreeing with it,

29:59

happy with it, we're measuring it, to

30:01

make sure it's there, you're already on

30:03

wicked, so it's fantastic. And then that

30:06

kind of scale and that push is

30:08

something that we analyze each week. How

30:10

many new customers, how much did they

30:12

come in, is it profitable, is it

30:14

verified, is our data matching your data,

30:16

etc, etc, like wicked, like wicked, and

30:18

back-and back-and back-and back-and back-and metrics, metrics,

30:21

but I think- stopping point right now

30:23

just until we get that subscribers. I

30:25

think that is going to be pretty

30:27

much everything they're going to focus on.

30:29

The skew customers will be a benefit.

30:31

So getting there, John, costs have to

30:33

be factored in, right? So we know

30:36

what the NCAC target will be of

30:38

a subscriber. I know, you said, is

30:40

otherwise engaged at the moment, but figuring

30:42

out, you know, what those costs look

30:44

like. And obviously, at this point, because

30:46

they don't scale all the like, and

30:48

obviously at this point, all the way,

30:51

because they don't scale all the way,

30:53

in order to achieve that. Nick, you're

30:55

saying that we're still missing a piece

30:57

and that was new for me. So

30:59

my apologies, I was a bit out

31:01

of the loop on what that we

31:03

needed there. Nick, you mentioned we're still

31:06

waiting on some subscription data? Well, it

31:08

was really just, if we're going to

31:10

set a target for the subscribers, you

31:12

know, what really just, you know, what

31:14

that target needs to be saying we

31:16

don't have the cogs, the physical cogs

31:18

that we do for ecom. Got it.

31:21

what then do we need to factor

31:23

in if we're setting a target for

31:25

pure subscriber? So just looking at the

31:27

last three years, this was I separated

31:29

the ad spend going through the meta

31:31

and Google ad accounts from spend going

31:33

to the subscriber landing pages, the funnels,

31:36

and then breaking that up by eCon.

31:38

It's going to be very close. There

31:40

were some campaigns where I was looking

31:42

at and you know it was going

31:44

through each campaign, looking at the landing

31:46

pages so it's going to be close

31:48

to them a little bit off. But

31:51

generally you can see the spend here

31:53

over the last three years on the

31:55

membership compared to ECA much more much

31:57

more spent here. This is the historical

31:59

intact over the last three years for

32:01

new subscribers taking the Sam subscriber. So

32:03

I had $40 in 2022, I think

32:06

you mentioned something the last call that

32:08

2023 there that was big. Big, big

32:10

surge in subscribers 2023. Then the NCAC

32:12

last year came up pretty significantly to

32:14

$51. So it's, it's identical. is this

32:16

too much? Is $51 getting into unprofitable

32:18

territory for requiring subscribers? Yeah, exactly. Yeah,

32:21

it seems like I'm sure we're close

32:23

because we've got both the on the

32:25

e-commerce side, we've got the data here

32:27

on the subscription side, so yeah, I'll

32:29

be really excited to know. what that

32:31

combined LTV is and dial it on

32:33

that number because like I said some

32:36

data some instincts where we think that

32:38

50 number is okay and that's what

32:40

we've been pushing forward at the moment

32:42

but we'd really like to dial it

32:44

in and know what we can scale

32:46

at. So in the process of getting

32:48

there, Ralph, I might lean on you

32:50

for this one, right? The number, or

32:53

I guess the types of costs that

32:55

we would recommend factoring in so that

32:57

we can get to that target NCAC

32:59

or the allowable NCAC. What should that

33:01

calculus look like? So that's your 11

33:03

has a recommendation back to the salt

33:05

strong guys here of here that we

33:08

think the NCAC target should be and

33:10

so on. How would you recommend we

33:12

sort of calculate those things out? I

33:14

think the analysis that Nick did here

33:16

in the last three years is super

33:18

helpful. I didn't realize that that was

33:20

done. So that's knowing historical data is

33:23

very helpful. The question really then becomes

33:25

back to you guys. Like we try

33:27

and figure out NCAC from effective LTV,

33:29

which is LTV for in this case

33:31

membership, minus any chargebacks, and then take

33:33

out COGS, the digital product. might be

33:35

a little challenging to figure that out,

33:38

but then like what your desired profit

33:40

margin is on that and because then

33:42

we look at e-commerce as sort of

33:44

icing on the cake. That's going to

33:46

be additional. It is like a prime

33:48

membership. It is like a Costco membership

33:50

because once you get them in, it's

33:53

really then it's about focusing in on

33:55

maximizing churn as much as possible. But

33:57

that number of 50 in 2024 Are

33:59

you guys comfortable with that NCAC number

34:01

to acquire a new customer or are

34:03

you not? Because that's really, it's more

34:05

of a judgment call than anything else

34:08

because when we factor in NCAC, we

34:10

always factor in, at least I do.

34:12

I do it, I factor in a

34:14

certain amount of profit margin. And if

34:16

your LGV is 124 and you're acquiring

34:18

for 50, like there's additional costs. Like

34:20

you guys need to get paid, there's

34:23

G&A, there's operating expenses, you know, there's

34:25

all the other things that go along

34:27

with it. But it's like, what are

34:29

you comfortable with for an intact figure

34:31

because we can say, all right, at

34:33

50 we can scale, but at 60

34:35

we need to optimize it, 40 or

34:38

30, we need to step on the

34:40

gas and ramp things up. And that's

34:42

really back to you guys. Yeah, that

34:44

would be awesome to know. Yeah, I

34:46

mean, that's real quick. Maybe that's a

34:48

joke question. And I'm in here listening

34:50

to my track. But yeah, at 50,

34:53

if we're talking about the actual attack

34:55

of what we're spinning on paid media,

34:57

then dude, all day long, I tell

34:59

Barry, I give you a million dollars

35:01

in mind, if you get new members

35:03

at 50. Assuming that we also get

35:05

some referrals and some freebies and we

35:08

obviously have about 100,000 people a month

35:10

organically just finding us through Google and

35:12

being on YouTube. So the answer to

35:14

that one is an absolute yes, 50

35:16

or less. The other thing, just you

35:18

guys are all aware, Jason on our

35:20

team is our head of operations and

35:23

he is, he's about 60% done. It'll

35:25

definitely be done in March where we're

35:27

breaking out the P&L because we essentially

35:29

have two companies. We have an e-commerce

35:31

company. And we have this membership and

35:33

so our county group and Jason's heading

35:35

it up. I mean, it should be

35:38

spot on. It's not just guesswork P&L

35:40

for both companies. And at some point,

35:42

we might even split them up and

35:44

have two completely separate companies, but at

35:46

least we'll have a P&L so you

35:48

guys can see all right. Here's what

35:50

this really looks like on the ecom

35:52

side and on Shopify. And here's what

35:55

it looks like on the membership side.

35:57

But if you look at our mission

35:59

statement and our vision. And everything that

36:01

we do is a company, you don't

36:03

see the word or equipment or Shopify

36:05

or Econ anywhere on there, it's never

36:07

mentioned. So I think you guys run

36:10

the right path. where we're a club,

36:12

we're a community, that's what I get

36:14

excited about, that's what keeps us up

36:16

at night, is how do we grow

36:18

this club and this community and really

36:20

get more people in and fix the

36:22

churn problem is probably a bigger pain

36:25

point than selling more at more. And

36:27

then finally I'll say, Ralph, you're lucky,

36:29

just from listening here, John and TJ,

36:31

Nick, make you look really good, so

36:33

I gotta get a good team here.

36:35

Thanks for putting me on that list,

36:37

Joe, Joe, I appreciate that. Even the

36:40

sales guy, that's good. That's Joe Simon.

36:42

I mean, that's really, that's the crux

36:44

of all this. This is why we

36:46

do all this pre-work, because we can

36:48

run paid media for you. And if

36:50

we don't know a number, that just

36:52

makes you go out of business faster.

36:55

We don't want that. We want you

36:57

guys to be with us for a

36:59

long time. have you be as profitable

37:01

and the relationship make the most sense

37:03

to you, but we need to know

37:05

what those ranges are. Now that range,

37:07

that $50 or $50 is like your

37:10

midpoint. Less than that is great, a

37:12

little bit higher, okay, we need to

37:14

have a discussion, but then the question

37:16

really becomes all day long, get you

37:18

$50 members, but then how can we

37:20

decrease churn? churn for us was our

37:22

biggest issue like three or four years

37:25

ago. We've solved that because you know

37:27

what? Joke, because we do this now,

37:29

because now we're on the same page

37:31

with everybody that comes into this, but

37:33

I know that churn is like the

37:35

most expensive thing. So how can we

37:37

help with that? We have additional services.

37:40

We have email, we have CRO, we

37:42

have all these other things layered on

37:44

top of that. Maybe that's sort of

37:46

a secondary thing. But if we have

37:48

a number to start with paid traffic

37:50

traffic, like that's golden. And if you

37:52

as the owner say like 50 is

37:55

it, like that's what we shoot for.

37:57

The question then becomes for the smart

37:59

guys in the call here, can we

38:01

get to 50 and at what scale?

38:03

So like I said, we cut that

38:05

off a little bit short here. We

38:07

went into a conversation about LTV, how

38:10

to enhance LTV. how to increase value,

38:12

sort of after that call. Like I

38:14

said, we'll air that at a later

38:16

date, but I think today's show is

38:18

really is instructive for you to determine

38:20

what you can pay to acquire a

38:22

customer. You have to look at all

38:25

the different figures that we talked about.

38:27

John actually uses a lot of different

38:29

examples in there. So go back and

38:31

if you're listening, watch it over on

38:33

our YouTube channel. perpetual traffic.com/YouTube. It should

38:35

be up there by the time this

38:37

airs. We had to do a lot

38:40

of editing so it might not be

38:42

there. If you're downloading it early in

38:44

the morning, the first day this episode

38:46

comes out. So apologies there, but go

38:48

back and check on it a day

38:50

or two later and make sure that

38:52

you do download your NCAC calculator completely

38:54

free from us at Tier 11 over

38:57

at Tier 11.com/NCAC. So on behalf of

38:59

my amazing co-host. Lauren E. Petrullo, who

39:01

I believe is in Austin this week,

39:03

at South by Southwest. If I'm not

39:05

mistaken, hopefully she's having a blast there.

39:07

Until next show, see ya. You've been

39:09

listening to perpetual traffic.