Many businesses make this mistake.
Recently, I asked a business owner:
“Who’s your ideal customer—the target market you LOVE serving and gives you the highest customer lifetime value?”
He paused for a moment and said –
“The connoisseurs. They are all 40+ years old. Lawyers, doctors, dentists, etc, so price isn’t an issue. They are very, very passionate and knowledgeable. That’s why they want to try everything and experience the little differences in the nuances. They easily spend 2 to 3 hundred buckaroos per order… and return every month.”
I nodded my head in agreement.
This sounds like a great prospect.
(passionate. wealthy. loyal. high CLV)
BUT
When I opened the FB ad library…
All their ads target young, adventurous Gen Z, who are uninterested in their core products and question the price tag.
(their new subscribers literally reply with angry support tickets to complain about expensive products)
THEN
I headed over to their website…
Again, the popup form completely repeals connoisseurs.
So, I asked:
“Why are we focusing our entire marketing funnel on a less profitable prospect in the long run? What’s the strategy here?”
My client:
“I think we’ve run out of connoisseurs. This seems like a new growing market.”
“Huh?”
I looked at their revenue last month:
178k
Look, this number isn’t bad.
But I doubt you exhausted all the connoisseurs in a 13.6B size market (in the US alone) when you’re doing slightly over 2M a year.
The real reason?
They focus on customer acquisition cost (CAC), not lifetime value (CLV).
But just because you couldn’t find an advertising angle that works does not mean you’ve run out of ideal prospects. It means:
1) You are not doing your 80% (research)
2) You are focusing on the wrong metric
Here’s how email can help:
ONE
Email is the best strategy for maximizing earnings and increasing customer lifetime value. This gives you a better margin PLUS more advertising budget.
TWO
Email is like a free experimental lab.
It allows you to test different angles and hooks without breaking the bank. When you find a winning angle, duplicate and multiply that angle.
This is a great way to scale.
Talk soon,
– WYH