Hockenmaier: Payback period is a far better metric than LTV:CAC
Dan Hockenmaier · Developing a growth model + marketplace growth strategy | Dan Hockenmaier · Oct 9, 2022 · at 9:24
Dan Hockenmaier (Head of Strategy at Faire) argues why cash reinvestment cycles make payback period superior to LTV/CAC for paid marketing.
0:00 / 0:14exact quote · 14.6s
▶ Watch the full episode on YouTube → 720p mp4 · rendered on demand · StarZero watermark
“Thinking about something like payback period is a much better measure of paid marketing performance than LTV to CAC because the speed at which you get enough money back to then go acquire another customer has much more bearing on how fast your business can grow than just the raw kind of LTV to CAC.”
quote is from the automated transcript, cleaned for reading: filler sounds and stutters are removed, nothing is rephrased. names can be misheard (the analysis reads context, assessments check outside sources). how →
More from Dan Hockenmaier
Hockenmaier: Aggregating demand determines the winning marketplace
“I think ultimately demand is the only thing that matters. If you are successful at aggregating the demand in your industry, you will have the winning marketplace.”
Hockenmaier: Marketplace expansion requires keeping GTM in lockstep with product readiness
“It's who can deliver an Incredible end-to-end customer experience first, even if for a smaller number of customers, because that's what creates the flame where actually like customers are really loving it, retain talking about it, and you can then expand from …”
Hockenmaier: The thesis of unbundling horizontal platforms is overhyped and rarely succeeds
“Broadly though, I think that we overhyped the idea of unbundling. So I think every six months I've seen articles, somebody wrote, this is the unbundling of Reddit, the unbundling of LinkedIn, the unbundling of Facebook. We're going to take All those blue links…”
Hockenmaier: Autonomous vehicles will end the ride-sharing marketplace model
“As soon as autonomous vehicles arrive, we're gonna fully consolidate that industry. And it's not gonna be marketplace model anymore.”
Hockenmaier: Later marketplace cohorts often see lower CAC and higher LTV
“So typically, as you acquire more and more customers, you're acquiring the marginally good fit customer over time. And your CACs go up, your LTVs go down, it gets harder and harder. Marketplace actually the inverse, like the supply of liquidity is improving, t…”
Hockenmaier: Dual-sided ROI equations allow marketplaces to ignore balance ratios
“Actually the thing that matters is can you write an ROI equation for acquiring supply and demand, which fully internalizes the marketplace dynamic. And so what I mean by this is like, if you're acquiring a new customer, you need to Include the CAC of acquiring…”