8d • General Discussion
Before you THINK about running ads, do these 4 things FIRST…
- Know your TRUE lifetime metrics.
A lot of owners just know what their current mrr is.
That doesn’t mean anything in terms of ad profitability.
You NEED:
- Average paid member lifetime (months)
- Real LTV (monthly price x av lifetime)
Without these metrics, ads are simply a gamble.
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2. Clearly understand your CPA (cost per acquisition) limit.
Breaking even AFTER month 3 can start to have a huge effect on cashflow.
Especially with high ad spend.
So calculate your CPA limits for months 1, 2 and 3.
This gives you a clear idea on profitability, especially when compared to paid member LTV.
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3. Hyper-focus on Free → Paid conversion rate.
Ideally, this value is greater than 4%.
If lower, fix offer positioning and about page.
A good conversion rate amplifies ad effectiveness.
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4. Check your MRR retention curve.
Specifically for the past 3 months and weighted average values (bottom row of table).
If month 1 MRR churn is brutal, ads just pour water into a leaking bucket.
Ideally, month 1 MRR retention > 70%.
Hope this helps!
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Before you THINK about running ads, do these 4 things FIRST…
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