Blomfield: Monzo killed a cheap acquisition channel due to negative customer LTV
Tom Blomfield · Consumer Startup Metrics | Startup School · Y Combinator · Jan 6, 2024 · at 7:41
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Tom Blomfield, co-founder of Monzo and YC Group Partner, discusses tracking true customer acquisition cost versus lifetime value.
0:00 / 0:43exact quote · 43.1s
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“Back at Monzo, we found a particular money saving blog that was very, very cheap to get users from. They sent us hundreds and hundreds of users when we were eventually paying for advertising. It seemed very, very cheap, but the customers, it turns out, were deeply unprofitable. They would load money onto their Monzo card, they'd go on holiday, and then they instantly just go and take a thousand pounds out from the ATM and just spend in cash. And we couldn't understand why this was for a very, very long time. We researched it. But the net result of it was we shut down that advertising channel. Even though the cost of acquisition looked really, really good for that channel, the lifetime value of those customers were negative. The revenue and the profit they generated was negative for the company because they generated so much cost.”
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