How to 10x the Value of Your Business Without Adding a Single Customer

Copy This Strategy, It’ll Blow Up Your Business

https://www.youtube.com/watch/eL79vzNn78U

00:00:00.080 What if I told you that your business
00:00:01.600 could be worth two, three, even 10 times
00:00:04.319 more without adding a single customer?
00:00:06.560 I’ve sold three companies, invested in
00:00:08.400 dozens more, and I’ve seen the same
00:00:10.240 revenue numbers get completely different
00:00:12.000 price tags. And the truth is, the
00:00:13.840 difference always comes down to one
00:00:15.679 metric most founders ignore. By the end
00:00:17.680 of this video, you’ll have the
00:00:19.279 stepbystep formula to wildly increase
00:00:22.160 the value of your business and set
00:00:23.760 yourself up to sell for way more when
00:00:26.000 the time comes. Most founders think that
00:00:27.840 the way to grow their business is just
00:00:29.519 getting more customers through the door.
00:00:31.279 But let me tell you, that’s just simply
00:00:33.440 not true. The real multiplier is how
00:00:35.920 much you grow from the ones you already
00:00:38.079 have. Let’s start with the question a
00:00:40.399 lot of you might be asking yourself, why
00:00:42.000 does this even matter? Getting new
00:00:44.160 customers is getting more and more
00:00:46.640 expensive. And when somebody comes to
00:00:48.480 buy your business, they don’t care how
00:00:50.320 many like total customers you have. They
00:00:52.160 care about how many stay and how much
00:00:54.239 they spend over what period of time.
00:00:55.920 Here’s the facts. It’s five to seven
00:00:58.480 times easier to sell to an existing
00:01:00.719 customer than to a new lead. People are
00:01:03.280 willing to buy more of what they’ve
00:01:05.119 already bought. Trying to get somebody
00:01:07.040 to buy from you for the first time,
00:01:09.040 that’s hard. Think about it. Company A
00:01:12.080 obsessed with new customer acquisition.
00:01:14.080 They’re like the ultimate salespeople
00:01:15.920 marketing and they’re just like, I’m the
00:01:18.000 best marketer ever. And they’re burning
00:01:20.000 cash on ads. The problem is they get
00:01:21.759 high churn versus company B. focus on
00:01:24.799 getting the customers, delivering value.
00:01:27.680 Company A struggles to raise money
00:01:29.600 despite growth. Company B gets acquired
00:01:32.159 at a premium. Why? Predictable revenue.
00:01:35.280 Why is predictable revenue important to
00:01:37.439 buyers? Because when they buy your
00:01:39.840 business, they’re going to pay you money
00:01:42.000 and they expect to make a return on that
00:01:43.759 money. So, the probability of seeing a
00:01:46.560 return is what matters most. When I’m
00:01:49.040 buying a business, I always look at the
00:01:51.280 amount of risk I’m willing to take. If
00:01:53.040 the business is small and they don’t
00:01:54.560 have predictable revenue and they’re not
00:01:56.320 growing, there’s a lot of risk in me
00:01:58.079 buying that business. If the business is
00:01:59.920 bigger and the customers are happy and
00:02:02.159 they buy more and more, I have less risk
00:02:05.040 that something bad is going to happen.
00:02:06.399 That is why people pay more for
00:02:08.639 companies that have predictable revenue.
00:02:10.560 And I know some of you guys are
00:02:12.239 thinking, “But Dan, I just want to grow
00:02:14.640 my business. Why do I have to care about
00:02:16.480 exit valuations?” Having a business that
00:02:19.280 is valuable to somebody else is a great
00:02:21.680 business to run. You may never want to
00:02:23.440 sell. That’s great. A company that could
00:02:25.599 sell is a great company to operate. See,
00:02:28.239 your best customer is the one already
00:02:30.560 paying you. So, always try to find ways
00:02:32.480 to serve them better so that they pay
00:02:34.560 you more. Now, before we move on to the
00:02:36.879 next section, if you want to know the
00:02:38.319 rough valuation of your business, just
00:02:40.160 click the first link in the description
00:02:41.599 below to get access to my valuation
00:02:43.440 calculator. Essentially, you can input
00:02:45.519 all your business metrics and get a
00:02:47.280 rough estimate of how much your business
00:02:48.959 is worth to an investor. But what
00:02:50.959 actually creates that predictability
00:02:52.879 that buyers are willing to pay 10 times
00:02:54.879 more for? You might want to grab a pen
00:02:56.879 for this. It’s called lifetime value.
00:02:59.519 Here’s the best way to think about it. I
00:03:01.920 have a customer. How much does the
00:03:04.319 average customer pay me over time? Is it
00:03:07.599 $100 once? Is it $10,000 over 18 months?
00:03:10.959 Here’s the official definition. It’s how
00:03:13.440 much money a business makes from a
00:03:15.280 single customer during the entire time
00:03:17.280 they stay as a customer. So, for
00:03:18.879 example, if a customer buys a $100
00:03:21.040 product every month for 12 months,
00:03:22.959 lifetime value equals $1,200 bucks. If
00:03:25.920 another buys once for 200 bucks,
00:03:28.959 lifetime value equals $200. The more
00:03:32.159 each customer is worth over time, the
00:03:34.879 more valuable and predictable your
00:03:36.959 business becomes. Now, this is a big
00:03:39.120 concept. It’s called expansion revenue.
00:03:42.000 Expansion revenue is the holy grail.
00:03:45.040 Grow what you’ve got before chasing what
00:03:47.760 you don’t. And we’ll get into this in a
00:03:49.440 second. Now, to really understand LTV,
00:03:51.920 we need to know how to calculate it.
00:03:53.280 It’s a simple formula. LTV equals the
00:03:56.560 average order value, how much the person
00:03:58.560 pays, times the purchase frequency,
00:04:01.200 monthly, maybe weekly, maybe yearly, I
00:04:03.840 don’t know, multiplied by the customer
00:04:06.400 lifespan. How long do they stick around
00:04:08.480 or do they cancel after 6 months? Maybe
00:04:10.319 they stick around for 6 years, maybe 10
00:04:12.239 years. I know some businesses, they’ve
00:04:14.000 never lost a customer. This is
00:04:15.599 completely different for every business.
00:04:17.519 I mean, if you have a plumbing company
00:04:19.600 that’s going to have a different
00:04:21.040 customer profile in regards to lifetime
00:04:22.880 value than potentially an AI software
00:04:25.440 product, that’s my world, that pays
00:04:27.120 every month, but they might only stay
00:04:28.880 for 18 months or 24 months. So, for
00:04:31.199 example, if you have a media agency and
00:04:33.199 right now customers are buying up front
00:04:35.280 maybe 25 grand for a project, that’s
00:04:38.000 cool. But maybe customers buy on average
00:04:41.120 1.2 times in their lifespan. So it’s not
00:04:44.320 just 25 grand, it’s 25 grand multiplied
00:04:46.960 times 1.2. So a customer is worth a
00:04:49.680 little bit longer. See, that’s what I’m
00:04:51.199 looking for. It’s like every customer
00:04:53.040 buys once, but maybe some customers buy
00:04:55.040 two or three times. That’s the average
00:04:57.040 purchase frequency over that customer
00:04:58.800 lifespan. to really bring this home. Bad
00:05:01.680 situation. $100 average spend purchase
00:05:04.639 one time once a year. That’s a $100
00:05:07.120 lifetime value of a customer, which some
00:05:09.120 people have and they don’t even know and
00:05:10.320 they think it’s like, “Oh my god, we’re
00:05:11.600 doing so great.” No, you’re not. Example
00:05:13.520 number two, this is great. Average
00:05:15.199 customer spends $100, but they buy every
00:05:17.759 month. So that’s 12 purchases per year.
00:05:19.759 But on average, they stick around for 3
00:05:21.680 years. That’s a lifetime value of
00:05:23.680 $3,600. That’s a 36x difference in value
00:05:28.720 without adding a single customer. Those
00:05:31.280 are wildly two different businesses. But
00:05:33.840 what’s actually considered good? Is it
00:05:36.160 good that a customer is worth 25 grand?
00:05:38.560 Or what if they should be worth 100,000?
00:05:41.039 You don’t know, right? Cuz you might be
00:05:42.400 pumped. 25 grand, that’s awesome. That’s
00:05:44.479 profit. I can live with that. But what
00:05:46.000 if your potential is four times more?
00:05:48.639 That’s what we need to figure out. So,
00:05:50.479 just so you understand, I’ve been
00:05:52.479 involved in buying over probably 35
00:05:55.919 companies in just the last 5 years
00:05:57.520 alone. I’ve exited several companies
00:05:59.919 myself. I’ve invested and helped those
00:06:02.479 companies exit. So, I want to give you a
00:06:04.560 ratio that’ll help you understand what
00:06:06.639 great lifetime value is. The truth is
00:06:08.560 though is it does vary depending on
00:06:10.720 industry. So, instead of asking is my
00:06:13.039 LTV good or bad, compare it against
00:06:15.759 customer acquisition costs. essentially
00:06:17.600 how much does it cost you to acquire a
00:06:19.840 new customer? Because once I understand
00:06:21.440 my lifetime value and my CAC ratio, then
00:06:24.639 I create a new formula that puts it all
00:06:26.479 into perspective. The reason you want to
00:06:28.160 calculate the cost to acquire customer
00:06:29.759 over the LTV is because when you are
00:06:32.479 doing marketing, you want to be
00:06:34.240 efficient and you want to be able to
00:06:35.840 grow. So you want that ratio to be as
00:06:37.919 good as it possibly can. So if you spend
00:06:39.919 a lot of money to get a customer that’s
00:06:41.120 not worth a lot, business isn’t a great
00:06:42.720 business. If you spend a little bit of
00:06:44.160 money to get a customer’s worth a lot,
00:06:45.759 that’s a winner winner chicken dinner.
00:06:47.520 Here’s a rule of thumb. I’m going to
00:06:49.039 just assume on average you have 70 to
00:06:51.680 80% margin, meaning that it cost you $20
00:06:54.240 in cost to get a $100 customer. With
00:06:56.479 that in mind, let’s talk about some
00:06:57.919 ratios. If your ratio is less than 3:1,
00:07:01.039 meaning that a customer is worth $300,
00:07:03.599 you’re spending $100 to get them, then
00:07:06.080 you’re probably in trouble. You’re
00:07:07.680 spending way too much to get a customer
00:07:10.080 compared to what they’re worth. If your
00:07:11.599 ratio is between a range of 3:1 to 5:1,
00:07:15.199 then you’re healthy. You’re essentially
00:07:16.560 making good returns on every customer.
00:07:18.160 If ratio is more than 5:1, you’re
00:07:20.560 getting into the worldass territory.
00:07:22.400 That’s when buyers and investors will
00:07:24.319 pay premium on the multiples for your
00:07:26.720 business because that means that they
00:07:28.960 can grow your business easily and it’s
00:07:30.800 generating more profit. See, strong
00:07:32.800 lifetime value is the backbone of all
00:07:35.360 valuations. If your customers stick
00:07:37.199 around and they spend more, that’s where
00:07:38.720 the magic happens. So the obvious
00:07:40.479 question, how do I actually increase my
00:07:42.960 lifetime value? There’s only three ways
00:07:44.880 that you can increase the value of a
00:07:47.840 customer. The first one is you got to
00:07:50.160 keep the customer for longer. What I
00:07:52.800 always do when I sit down with a founder
00:07:54.639 is I’m looking at how long customers
00:07:57.280 stick around and I have to increase
00:07:59.680 that. I have to improve it because
00:08:01.599 you’ve done all this work to get the
00:08:04.000 customer and then they leave. To fix
00:08:06.000 that, it’s kind of simple. Look at why
00:08:08.240 they left. I had a friend that had this
00:08:10.080 software and he had all these signups.
00:08:12.000 All these people became customers, but
00:08:13.759 then he had 10% every month leaving. If
00:08:16.960 you’re losing 10% of your customers
00:08:18.479 every month, that means every 10 months
00:08:20.639 you lose 100% of your customer base. He
00:08:24.080 didn’t get the customer to what I like
00:08:25.919 to call core value. They were promised
00:08:28.240 something on your homepage. They bought
00:08:29.840 from you and you didn’t get them that
00:08:32.240 value as fast as humanly possible. So,
00:08:34.719 you have to nail the onboarding. Design
00:08:36.559 it. Okay. Think about like the effort
00:08:38.640 that Disney goes through for new
00:08:40.240 customer experience. Man, that whole
00:08:41.919 thing is dialed in from the phone call
00:08:44.240 to the app to the park experience to the
00:08:47.760 music they play in the parking lot. Not
00:08:50.480 only is it designed to get you in the
00:08:52.320 right headsp space, but then all of the
00:08:54.480 signage, all of the details, the
00:08:56.720 railings, they’re all custom for the
00:08:58.959 situation you’re in, the park you’re in,
00:09:00.560 it’s all themed. They nail that
00:09:02.720 experience. That essentially gets you
00:09:05.040 time to first value of experience Disney
00:09:07.760 soon as you walk out of your car. And
00:09:09.279 then you have to look at stickiness,
00:09:11.279 right? How easy is it for somebody to
00:09:13.680 leave? If you don’t make it sticky, then
00:09:16.320 some person that’s better at marketing,
00:09:18.160 selling a bigger dream will get them to
00:09:20.480 switch. So, I always ask myself like
00:09:22.800 what integrations into their life, into
00:09:25.519 their habits can I create that makes me
00:09:28.240 top of mind, have them think about me
00:09:30.640 and make it a little harder for them to
00:09:32.640 swap. Could be the data I’ve collected
00:09:34.640 when they became a new customer. I call
00:09:36.320 this the octopus method where I’ve got
00:09:38.480 my tentacles and they’re sticky. Pow and
00:09:41.279 pow. Not from a place of like trying to
00:09:43.600 make it hard cuz I suck and I want them
00:09:45.200 to stick around, but just don’t make it
00:09:47.040 too easy for somebody to go click click
00:09:48.880 swap. And then finally, be proactive in
00:09:52.399 your customer success. Meaning that if
00:09:54.959 you know somebody is not using your
00:09:57.440 product, they haven’t been to your gym
00:09:58.800 in a while, they haven’t logged into the
00:10:00.720 software you sold them, have somebody
00:10:02.800 reach out. To me, this is a no-brainer.
00:10:05.040 In this world of technology, it’s
00:10:06.959 actually quite simple to set up sensors
00:10:09.360 where you can monitor the customer’s
00:10:11.760 usage or consumption of what you have
00:10:14.000 and have a report pulled every day to
00:10:16.480 tell you in the last 30 days of your
00:10:18.320 total customers which ones are red,
00:10:20.720 yellow, green, or purple. Purple are
00:10:23.600 your super fans. Okay? those ones you
00:10:26.399 want to like acknowledge and reward. But
00:10:28.480 the people that are red and yellow,
00:10:30.160 that’s where you want to be proactive in
00:10:31.440 reaching out to them to make sure that
00:10:32.800 they understand, they’re not upset with
00:10:34.560 you. I taught this to one of my coaching
00:10:36.800 clients and he had an HR software. His
00:10:39.440 biggest reasons for customers turnurning
00:10:41.360 was the person that worked there took a
00:10:43.440 new job and I said, “Hey, why don’t you
00:10:45.760 set up a monitor of your customers on
00:10:48.160 their LinkedIn account? When you notice
00:10:50.000 somebody updates to a new position, you
00:10:52.320 have your team reach out to their old
00:10:53.839 team and other people on the team to
00:10:55.120 figure out who the new person that took
00:10:56.399 over and then reach out to the person
00:10:57.920 that went to the new company and see if
00:10:59.440 they won’t want to buy your software at
00:11:00.959 the new company. So that’s how we keep
00:11:02.880 customers longer, also known as
00:11:04.560 retention. Number two is get them to buy
00:11:06.560 more often. Essentially, the frequency
00:11:08.480 when I think about it, it’s like
00:11:10.640 somebody’s bought from me, but maybe
00:11:12.720 they’re using more of what I sold. So I
00:11:15.200 want to create like usage based pricing.
00:11:17.200 So, for example, if they come to the
00:11:18.560 gym, I might say, “Okay, you’re allowed
00:11:19.839 to come to the gym five times a week for
00:11:21.440 that membership, but if they’re coming
00:11:22.959 in more, then they pay more for the more
00:11:24.880 times they come.” If I have storage on
00:11:27.279 Dropbox, I’ll pay more the more storage
00:11:29.600 I put there. Or the other thing is to
00:11:31.920 think about what are other ways to
00:11:33.920 increase the spend per purchase. You
00:11:35.839 know, in the software world, we have
00:11:37.200 this thing called implementation fees,
00:11:38.720 which is essentially a way to charge to
00:11:40.959 help the customer onboard. For example,
00:11:43.360 I built a company called Flowtown that
00:11:45.040 was a social marketing platform and then
00:11:46.880 I was asking what do customers do before
00:11:48.640 they come in to use the software? Well,
00:11:50.320 they go and they buy templates from
00:11:52.079 other people to use to get ready to use
00:11:54.000 my software. Why don’t I sell those
00:11:55.760 templates inside my software so they
00:11:57.680 don’t have to leave? That way I can
00:11:59.040 increase my share of wallet. There is so
00:12:01.200 many opportunities in your business to
00:12:03.839 look to sell higherric things. I like to
00:12:06.560 think about it like a garden is that I
00:12:08.720 could want to have this like luscious
00:12:10.560 garden and I keep planting seeds and
00:12:12.399 planting seeds and planting seeds, but
00:12:13.920 if I don’t pay attention the current
00:12:15.440 plants and seeing if they’re getting all
00:12:16.880 the nutrients they need or check the
00:12:18.959 soil quality or even make sure where I’m
00:12:21.200 planting the seeds is actually going to
00:12:22.639 grow, then I can do a lot of work that
00:12:25.040 doesn’t get me this lush garden. So, now
00:12:27.120 that you know all the moving parts,
00:12:29.040 here’s where it all comes together and
00:12:30.880 10x is the value of your business. You
00:12:33.040 have to take action. Now that you know
00:12:34.959 like all the different things you could
00:12:36.399 do to increase the value of a customer,
00:12:38.480 I want you to pick one. What is the
00:12:41.120 thing that you’re going to focus on?
00:12:42.480 Because you could do it all, but it
00:12:43.760 would just become overwhelming. Is it
00:12:45.440 how much they’re paying? Is it how often
00:12:48.079 they pay? Which one has the highest
00:12:50.399 potential return for the least amount of
00:12:52.399 effort? That’s what you want to look at.
00:12:53.839 Pick that one for the next quarter and
00:12:55.839 execute. And remember, if you want
00:12:57.519 access to my valuation calculator, just
00:12:59.680 click the first link in the description
00:13:01.200 below, plug in your metrics, and see how
00:13:03.040 much your business could be worth. This
00:13:04.880 is business. If you have a business, you
00:13:07.200 probably want to make the most amount of
00:13:08.720 profit for least amount of effort. Trust
00:13:10.480 me, customers being worth more in your
00:13:13.120 business makes more profit, means you
00:13:15.040 have more resources to invest in buying
00:13:17.120 back freedom. But more importantly, most
00:13:19.680 people look at their life through the
00:13:21.839 lens of cash flow. How much money do
00:13:23.920 they make every month? because they
00:13:25.120 think, “Okay, that’s what I can afford
00:13:26.560 to pay for my life.” I’m more interested
00:13:28.880 in increasing the potential for your net
00:13:31.279 worth. See, the moment you start
00:13:32.959 treating your business this way, then
00:13:34.880 the business becomes valuable. And if
00:13:36.800 you look at your personal net worth
00:13:38.720 sheet, which the banks ask you to submit
00:13:40.560 every time you want to borrow money,
00:13:41.680 having that number go up because the
00:13:43.760 business is worth more because you’ve
00:13:45.440 done these things to make a customer
00:13:47.040 worth more, is probably the biggest
00:13:49.600 opportunity for you to create massive
00:13:51.120 wealth in your life. Now, if you want to
00:13:52.800 learn how to get ahead of 99% of the
00:13:55.279 people that are already using AI, but
00:13:56.800 you want to be better, click here and
00:13:58.320 I’ll see you on the other