Dan Martell - October 21, 2025


Copy This Strategy, It’ll Blow Up Your Business


Episode Stats

Length

13 minutes

Words per Minute

204.00429

Word Count

2,853

Sentence Count

137


Summary

Summaries generated with gmurro/bart-large-finetuned-filtered-spotify-podcast-summ .

Transcript

Transcript generated with Whisper (turbo).
00:00:00.000 What if I told you that your business could be worth two, three, even 10 times more without
00:00:04.940 adding a single customer? I've sold three companies invested in dozens more, and I've
00:00:09.500 seen the same revenue numbers get completely different price tags. And the truth is the
00:00:13.640 difference always comes down to one metric most founders ignore. By the end of this video,
00:00:18.460 you'll have the step-by-step formula to wildly increase the value of your business and set
00:00:23.660 yourself up to sell for way more when the time comes. Most founders think that the way to grow
00:00:28.380 their business is just getting more customers through the door. But let me tell you, that's
00:00:32.420 just simply not true. The real multiplier is how much you grow from the ones you already have.
00:00:38.640 Let's start with the question a lot of you might be asking yourself, why does this even matter?
00:00:43.180 Getting new customers is getting more and more expensive. And when somebody comes to buy your
00:00:48.820 business, they don't care how many like total customers you have. They care about how many
00:00:53.000 stay and how much they spend over what period of time. Here's the facts. It's five to seven times
00:00:58.700 easier to sell to an existing customer than to a new lead. People are willing to buy more of what
00:01:04.820 they've already bought. Trying to get somebody to buy from you for the first time, that's hard.
00:01:10.100 Think about it. Company A, obsessed with new customer acquisition. They're like the ultimate
00:01:14.840 salespeople marketing and they're just like, I'm the best marketer ever. And they're burning cash
00:01:20.200 on ads. The problem is they get high churn versus company B. Focus on getting the customers,
00:01:26.140 delivering value. Company A struggles to raise money despite growth. Company B gets acquired
00:01:32.060 at a premium. Why? Predictable revenue. Why is predictable revenue important to buyers? Because
00:01:38.580 when they buy your business, they're going to pay you money and they expect to make a return
00:01:43.360 on that money. So the probability of seeing a return is what matters most. When I'm buying a
00:01:49.420 business, I always look at the amount of risk I'm willing to take. If the business is small and they
00:01:54.300 don't have predictable revenue and they're not growing, there's a lot of risk in me buying that
00:01:58.380 business. If the business is bigger and the customers are happy and they buy more and more,
00:02:03.680 I have less risk that something bad is going to happen. That is why people pay more for companies
00:02:08.960 that have predictable revenue. And I know some of you guys are thinking, but Dan, I just want to
00:02:14.280 grow my business. Why do I have to care about exit valuations? Having a business that is valuable
00:02:19.780 to somebody else is a great business to run. You may never want to sell. That's great. A company
00:02:25.080 that could sell is a great company to operate. See, your best customer is the one already paying
00:02:30.780 you. So always try to find ways to serve them better so that they pay you more. Now, before we
00:02:36.220 move on to the next section, if you want to know the rough valuation of your business, just click
00:02:40.220 the first link in the description below to get access to my valuation calculator. Essentially,
00:02:44.660 you can input all your business metrics and get a rough estimate of how much your business is worth
00:02:49.260 to an investor. But what actually creates that predictability that buyers are willing to pay
00:02:54.060 10 times more for? You might want to grab a pen for this. It's called lifetime value.
00:02:59.320 Here's the best way to think about it. I have a customer. How much does the average customer
00:03:05.080 pay me over time? Is it a hundred dollars once? Is it $10,000 over 18 months? Here's the official
00:03:12.060 definition. It's how much money a business makes from a single customer during the entire time
00:03:17.220 they stay as a customer. So for example, if a customer buys a hundred dollar product every
00:03:21.640 month for 12 months, lifetime value equals 1200 bucks. If another buys once for 200 bucks,
00:03:28.640 lifetime value equals $200. The more each customer is worth over time, the more valuable
00:03:35.500 and predictable your business becomes. Now, this is a big concept. It's called expansion revenue.
00:03:41.880 Expansion revenue is the holy grail. Grow what you've got before chasing what you don't. And
00:03:48.400 we'll get into this in a second. Now, to really understand LTV, we need to know how to calculate
00:03:52.920 it. It's a simple formula. LTV equals the average order value, how much the person pays times the
00:03:59.720 purchase frequency monthly, maybe weekly, maybe yearly. I don't know. Multiplied by the customer
00:04:06.200 lifespan. How long do they stick around or do they cancel after six months? Maybe they stick around
00:04:10.720 for six years, maybe 10 years. I know some businesses, they've never lost a customer.
00:04:15.100 This is completely different for every business. I mean, if you have a plumbing company, that's
00:04:19.840 to have a different customer profile in regards to lifetime value than potentially an ai software
00:04:25.280 product that's my world that pays every month but they might only stay for 18 months or 24 months
00:04:30.720 so for example if you have a media agency and right now customers are buying up front maybe
00:04:35.600 25 grand for a project that's cool but maybe customers buy on average 1.2 times in their
00:04:42.960 lifespan so it's not just 25 grand it's 25 grand multiplied times 1.2 so a customer is worth a
00:04:49.360 little bit longer see that's what i'm looking for it's like every customer buys once but maybe some
00:04:54.160 customers buy two or three times that's the average purchase frequency over that customer lifespan
00:04:59.520 to really bring this home bad situation hundred dollar average spend purchase one time once a
00:05:05.760 year that's a hundred dollar lifetime value of a customer which some people have and they don't
00:05:09.760 even know and they think it's like oh my god we're doing so great no you're not example number two
00:05:13.920 this is great average customer spends a hundred dollars but they buy every month so that's 12
00:05:18.480 purchases per year. But on average, they stick around for three years. That's a lifetime value
00:05:23.280 of $3,600. That's a 36X difference in value without adding a single customer. Those are
00:05:31.280 wildly two different businesses. But what's actually considered good? Is it good that a
00:05:36.700 customer's worth $25,000? Or what if they should be worth $100,000? You don't know, right? Because
00:05:41.960 you might be pumped. $25,000, that's awesome. That's profit. I can live with that. But what
00:05:45.880 if your potential is four times more that's what we need to figure out so just so you understand
00:05:51.400 i've been involved in buying over probably 35 companies in just the last five years alone
00:05:57.660 i've exited several companies myself i've invested and helped those companies exit so i want to give
00:06:03.860 you a ratio that'll help you understand what great lifetime value is the truth is though is it does
00:06:09.520 vary depending on industry so instead of asking is my ltv good or bad compare it against customer
00:06:16.080 acquisition costs essentially how much does it cost you to acquire a new customer because once
00:06:20.800 i understand my lifetime value and my cac ratio then i create a new formula that puts it all in
00:06:26.320 the perspective the reason you want to calculate the cost of acquire customer over the ltv is
00:06:31.040 because when you are doing marketing you want to be efficient and you want to be able to grow so
00:06:36.160 So you want that ratio to be as good as it possibly can.
00:06:39.360 So if you spend a lot of money to get a customer
00:06:40.900 that's not worth a lot, business isn't a great business.
00:06:43.100 If you spend a little bit of money
00:06:44.200 to get a customer's worth a lot,
00:06:45.620 that's a winner-winner chicken dinner.
00:06:47.400 Here's a rule of thumb.
00:06:48.460 I'm gonna just assume, on average,
00:06:50.540 you have 70 to 80% margin,
00:06:52.780 meaning that it costs you $20 in cost
00:06:54.780 to get a $100 customer.
00:06:56.180 With that in mind, let's talk about some ratios.
00:06:58.380 If your ratio is less than three to one,
00:07:00.740 meaning that if a customer's worth $300,
00:07:03.540 you're spending $100 to get them,
00:07:05.380 then you're probably in trouble.
00:07:07.360 You're spending way too much to get a customer
00:07:09.820 compared to what they're worth.
00:07:11.180 If your ratio is between a range of three to one
00:07:13.840 to five to one, then you're healthy.
00:07:16.020 You're essentially making good returns on every customer.
00:07:18.260 If ratio is more than five to one,
00:07:20.220 you're getting into the world-class territory.
00:07:22.360 That's when buyers and investors will pay premium
00:07:25.120 on the multiples for your business
00:07:26.960 because that means that they can grow your business easily
00:07:30.120 and it's generating more profit.
00:07:31.600 See, strong lifetime value is the backbone
00:07:34.680 of all valuations.
00:07:36.160 If your customers stick around and they spend more,
00:07:38.360 that's where the magic happens.
00:07:39.640 So the obvious question,
00:07:41.140 how do I actually increase my lifetime value?
00:07:43.780 There's only three ways that you can increase
00:07:46.200 the value of a customer.
00:07:48.420 The first one is you gotta keep the customer for longer.
00:07:52.000 What I always do when I sit down with a founder
00:07:54.420 is I'm looking at how long customers stick around.
00:07:57.720 And I have to increase that.
00:07:59.940 I have to improve it.
00:08:01.200 Because you've done all this work to get the customer
00:08:04.140 and then they leave.
00:08:05.620 To fix that, it's kind of simple.
00:08:07.400 Look at why they left.
00:08:08.880 I had a friend that had this software
00:08:10.340 and he had all these signups,
00:08:12.000 all these people became customers,
00:08:13.340 but then he had 10% every month leaving.
00:08:16.640 If you're losing 10% of your customers every month,
00:08:18.900 that means every 10 months,
00:08:20.580 you lose 100% of your customer base.
00:08:23.600 He didn't get the customer
00:08:24.960 to what I like to call core value.
00:08:27.060 They were promised something on your homepage,
00:08:29.000 they bought from you
00:08:30.180 and you didn't get them that value.
00:08:32.560 as fast as humanly possible.
00:08:34.480 So you have to nail the onboarding, design it, okay?
00:08:37.140 Think about like the effort that Disney goes through
00:08:39.660 for a new customer experience.
00:08:41.040 Man, that whole thing is dialed in
00:08:42.860 from the phone call to the app, to the park experience,
00:08:46.740 to the music they play in the parking lot.
00:08:49.900 Not only is it designed to get you in the right headspace,
00:08:52.980 but then all of the signage, all of the details,
00:08:56.320 the railings, they're all custom
00:08:58.140 for the situation you're in, the park you're in,
00:09:00.400 it's all themed.
00:09:01.200 they nail that experience that essentially gets you time to first value of experience disney
00:09:07.240 soon as you walk out of your car and then you have to look at stickiness right how easy is it
00:09:12.980 for somebody to leave if you don't make it sticky then some person that's better at marketing
00:09:17.860 selling a bigger dream will get them to switch so i always ask myself like what integrations into
00:09:24.520 their life into their habits can i create that makes me top of mind have them think about me
00:09:30.360 and make it a little harder for them to swap.
00:09:33.100 Could be the data I've collected
00:09:34.560 when they became a new customer.
00:09:35.920 I call this the octopus method,
00:09:37.620 where I've got my tentacles and they're sticky, pow and pow.
00:09:42.000 Not from a place of like trying to make it hard
00:09:44.060 because I suck and I want them to stick around,
00:09:45.780 but just don't make it too easy
00:09:47.420 for somebody to go click, click, swap.
00:09:49.060 And then finally, be proactive in your customer success,
00:09:53.380 meaning that if you know somebody is not using your product,
00:09:57.860 they haven't been to your gym in a while,
00:09:59.220 they haven't logged into the software you sold them,
00:10:02.080 have somebody reach out.
00:10:03.420 To me, this is a no-brainer.
00:10:05.000 In this world of technology,
00:10:06.480 it's actually quite simple to set up sensors
00:10:09.140 where you can monitor the customer's usage
00:10:12.020 or consumption of what you have
00:10:13.700 and have a report pulled every day
00:10:16.160 to tell you in the last 30 days of your total customers
00:10:19.000 which ones are red, yellow, green, or purple.
00:10:22.980 Purple are your super fans, okay?
00:10:25.320 Those ones you want to like acknowledge and reward,
00:10:28.100 But the people that are red and yellow, that's where you want to be proactive in reaching out
00:10:31.740 to them to make sure that they understand they're not upset with you. I taught this to one of my
00:10:36.320 coaching clients and he had an HR software. His biggest reasons for customers churning
00:10:40.960 was the person that worked there took a new job. And I said, hey, why don't you set up a monitor
00:10:46.600 of your customers on their LinkedIn account? When you notice somebody updates to a new position,
00:10:52.120 you have your team reach out to their old team and other people on the team to figure out who
00:10:55.380 the new person that took over and then reach out to the person that went to the new company and
00:10:59.120 see if they won't want to buy your software at the new company. So that's how we keep customers
00:11:03.140 longer, also known as retention. Number two is get them to buy more often, essentially the
00:11:07.780 frequency. When I think about it, it's like somebody's bought from me, but maybe they're
00:11:12.920 using more of what I sold. So I want to create like usage-based pricing. So for example, if they
00:11:18.080 come to the gym, I might say, okay, you're allowed to come to the gym five times a week for that
00:11:21.480 membership. But if they come in more, then they pay more for the more times they come. If I have
00:11:26.160 storage on Dropbox, I'll pay more the more storage I put there. Or the other thing is to think about
00:11:32.300 what are other ways to increase the spend per purchase? You know, in the software world, we
00:11:37.020 have this thing called implementation fees, which is essentially a way to charge to help the customer
00:11:41.480 onboard. For example, I built a company called Flowtown. There was a social marketing platform.
00:11:46.620 And then I was asking, well, what do customers do before they come in to use the software?
00:11:49.620 well they go and they buy templates from other people to use to get ready to use my software
00:11:54.360 why don't i sell those templates inside my software so they don't have to leave that way i can
00:11:58.700 increase my share of wallet there is so many opportunities in your business to look to sell
00:12:04.600 higher price things i like to think about it like a garden is that i could want to have this like
00:12:09.920 luscious garden and i keep planting seeds and planting seeds and planting seeds but if i don't
00:12:14.260 pay attention to current plants and seeing if they're getting all the nutrients they need
00:12:17.640 or check the soil quality
00:12:19.720 or even make sure where I'm planting the seeds
00:12:21.800 is actually gonna grow,
00:12:23.140 then I could do a lot of work
00:12:24.620 that doesn't get me this lush garden.
00:12:26.720 So now that you know all the moving parts,
00:12:28.960 here's where it all comes together
00:12:30.540 and 10X is the value of your business.
00:12:32.560 You have to take action.
00:12:34.260 Now that you know like all the different things you could do
00:12:36.500 to increase the value of a customer,
00:12:38.440 I want you to pick one.
00:12:40.380 What is the thing that you're gonna focus on?
00:12:42.400 Because you can do it all,
00:12:43.520 but it would just become overwhelming.
00:12:44.940 Is it how much they're paying?
00:12:47.080 Is it how often they pay?
00:12:48.840 Which one has the highest potential return
00:12:51.260 for the least amount of effort?
00:12:52.740 That's what you wanna look at.
00:12:53.820 Pick that one for the next quarter and execute.
00:12:56.400 And remember, if you want access to my valuation calculator,
00:12:59.380 just click the first link in the description below,
00:13:01.600 plug in your metrics
00:13:02.280 and see how much your business could be worth.
00:13:04.420 This is business.
00:13:05.940 If you have a business,
00:13:06.760 you probably wanna make the most amount of profit
00:13:08.920 for least amount of effort.
00:13:10.140 Trust me, customers being worth more in your business
00:13:13.360 makes more profit,
00:13:14.400 means you have more resources to invest
00:13:16.440 and buying back freedom.
00:13:17.940 But more importantly,
00:13:19.280 most people look at their life
00:13:21.220 through the lens of cashflow.
00:13:23.060 How much money do they make every month?
00:13:24.640 Because they think, okay,
00:13:25.480 that's what I can afford to pay for my life.
00:13:27.740 I'm more interested in increasing
00:13:29.640 the potential for your net worth.
00:13:31.600 See, the moment you start treating your business this way,
00:13:34.280 then the business becomes valuable.
00:13:36.260 And if you look at your personal net worth sheet,
00:13:39.240 which the banks ask you to submit
00:13:40.460 every time you wanna borrow money,
00:13:41.560 having that number go up
00:13:43.060 because the business is worth more because you've done these things to make a customer worth more
00:13:47.780 is probably the biggest opportunity for you to create massive wealth in your life now if you
00:13:52.340 want to learn how to get ahead of 99 of the people that are already using ai but you want to be
00:13:57.060 better, click here and I'll see you on the other side.