Why LTGP Matters (And The 4 Metrics That Actually Predict Churn)

Aaron Brewer

15d (edited) • General 🌎

How much is a client actually worth to your agency?

Not just this month.

But over the entire time they work with you.

If you don't know the answer, you're flying blind.

Because LTGP (Lifetime Gross Profit) is one of the most important numbers in your business.

And most agencies have no idea what theirs is.

Here's the formula:

LTGP = (Monthly Gross Profit Per Client) / (Monthly Churn Rate)

That's it.

Let me break it down.

Monthly Profit Per Client = How much profit you make from a client every month.

So if a client pays you $5K/month and it costs you $1K to deliver, your profit is $4K.

Monthly Churn Rate = The percentage of clients you lose every month.

So if you have 100 clients and lose 10, your churn rate is 10% (or 0.1).

Now plug it in.

$4K / 0.1 = $40K

That means each client is worth $40K to your agency over their lifetime.

That's a massive number.

And it changes everything about how you run your business.

Because now you know how much you can spend to acquire a client.

You know how much you can spend to keep them happy.

You know what your actual unit economics are.

But here's the thing.

LTGP is a lagging indicator.

It tells you what happened.

It doesn't tell you what's about to happen.

So you need leading indicators.

You need metrics that predict churn before it happens.

Here are the 4 metrics that actually matter:

Metric 1: Results vs. Target

Are your clients hitting their goals?

This is the most obvious one.

But it's also the most important.

If results are on track, clients stay.

If results are slipping, clients leave.

Track this weekly.

Metric 2: Engagement

Is the client actually using what you're delivering?

Are they opening your reports?

Are they responding to your messages?

Are they engaged in the process?

Low engagement is a red flag.

It means they're losing interest.

Metric 3: Communication

How often are you actually talking to your client?

Not just when something's wrong.

But proactively.

Clients who feel heard stay.

Clients who feel ignored leave.

Metric 4: Satisfaction

This is the hardest one to measure.

But it's the most predictive.

Are they happy?

Do they feel like you care?

Do they feel like you're invested in their success?

Or do they feel like just another client?

If you're tracking these 4 metrics, you can predict churn with incredible accuracy.

You'll know which clients are at risk before they tell you they're leaving.

And you'll have time to fix it.

That's how you increase LTGP.

This metric is not increased just by acquiring more clients.

But by keeping the ones you have.

And the way you keep them is by tracking what actually matters.

...

P.S.If you're just starting out and have fewer than 20 clients, don't stress too much about this yet. Churn becomes a real constraint once you're managing 20+ clients consistently. Until then, focus on getting to that point. Once you hit it, this becomes critical.

P.P.S. If this is something you're wanting to work on, drop your question in the comments.

@Jasmine Lotomau

and

@Leo Fluxomate

are both absolute beasts at this sort of thing and can help you increase your LTGP by decreasing your churn.

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