Apr 7 β’ General discussion
Here's how Ryan Deiss thinks about customer value β and why the business that spends the most to get a customer almost always wins. Worth 5 minutes of your time π
# The CVO Funnel β Why the Business That Spends the Most to Get a Customer Usually Wins
Ryan Deiss built Digital Marketer into a machine that has trained over 100,000 businesses in marketing and growth. His core idea β Customer Value Optimisation β is one of the most practical frameworks ever built for turning a small business into one that scales. Here's the whole thing broken down simply, with what it actually means for your business.
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## The one idea that changes everything
"He or she who is able and willing to spend the most money to acquire a customer wins."
Read that again.
Most small business owners try to spend as little as possible to get a new customer. They avoid advertising because it costs money. They rely on word of mouth because it's free. They feel proud when they land a client for nothing.
Ryan Deiss says that mindset is exactly what keeps most businesses small.
The businesses that dominate a market are not the ones spending the least. They're the ones who have figured out how much a customer is worth to them over time β and then they use that number to outspend everyone else to acquire new ones.
If you know a customer is worth $3,000 to you over two years, you can spend $500 to get them and still come out ahead. Your competitor, who only sells once and never follows up, can only afford to spend $50. You win every time.
The CVO funnel is the system that makes this possible.
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## How the CVO Funnel is structured
Think of it as five stages. Each one increases the value you extract from a customer, which in turn allows you to spend more to acquire the next one.
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β THE CVO FUNNEL β
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β β
β TRAFFIC β
β β β
β LEAD MAGNET ββββ Free value to get contact details β
β β β
β TRIPWIRE ββββββββ Low cost offer ($7β$49) β
β β β
β CORE OFFER ββββββ Your main product or service β
β β β
β PROFIT MAXIMISER β Higher ticket upsell β
β β β
β RETURN PATH βββββ Bring them back to buy again β
β β
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```
Most businesses only have the middle part β a core offer. They get a lead, pitch their main thing, close or lose them, and then start again from scratch. The CVO funnel plugs in what's missing on either side.
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## Stage 1 β Lead Magnet
This is a free piece of value you offer in exchange for someone's contact details. It does not need to be complicated. It just needs to solve one specific problem for one specific type of person.
A tradie might offer a free guide β "5 things to check before you hire a contractor." A bookkeeper might offer a free tax checklist. A cafΓ© might offer a free coffee card.
The point is not to give away your best stuff for free. The point is to identify people who are interested in what you do, get permission to contact them, and begin building a relationship before they're ready to buy.
**What this does for your business:** It builds a list. A list is an asset. Every person on it is a potential buyer you can contact whenever you want, for free, forever.
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## Stage 2 β Tripwire
This is a low-priced offer β typically between $7 and $49 β that converts a lead into a paying customer. The goal here is not profit. The goal is conversion.
A paying customer is psychologically different from a free subscriber. They have made a buying decision. They have entered a transaction with you. Research consistently shows that someone who pays you once, even a small amount, is far more likely to pay you again β and for much more.
The tripwire is designed to cover your advertising costs and give you a pool of proven buyers to sell your core offer to.
**What this does for your business:** It turns your advertising into a break-even or better β which means you can scale your lead generation without it costing you anything net.
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## Stage 3 β Core Offer
This is your main product or service. The thing you actually sell. Most businesses start here and stay here. The CVO funnel is built around it.
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## Stage 4 β Profit Maximiser
This is where most of the actual profit lives β and most businesses never get here.
A profit maximiser is a higher-ticket offer you make to people who have already bought your core product. A mechanic whose core offer is a service might profit-maximise with a maintenance plan. A personal trainer might profit-maximise with a nutrition coaching add-on. A software company might profit-maximise with a done-for-you setup service.
```
EXAMPLE: Dog Groomer
Lead Magnet: Free guide β "How to brush your dog between grooms"
Tripwire: $15 nail trim
Core Offer: $85 full groom
Profit Max: $299/quarter premium grooming membership
Return Path: Automated reminder emails + birthday wash offer
```
The customer who comes in for the $15 nail trim and ends up on a quarterly membership is worth $1,200 a year. The business that only sells grooms is making $340 a year from the same customer. Same customer. Completely different outcome.
**What this does for your business:** It dramatically increases the lifetime value of every customer you acquire, which directly increases how much you can afford to spend to get them in the door.
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## Stage 5 β Return Path
This is the most overlooked and most profitable stage of the entire funnel. It is also the cheapest.
The return path is everything you do to get existing customers to buy from you again. Email sequences. Loyalty programmes. Personal follow-up calls. Seasonal promotions. Referral incentives. Birthday offers.
Your existing customers already know you, trust you, and have bought from you. Converting them costs a fraction of what it costs to acquire a new customer β and they are far more likely to say yes.
Ryan Deiss recommends starting here before you build anything else. Before you create a lead magnet, before you set up ads, before you build a tripwire β go back to your existing customers and sell them something again.
**What this does for your business:** It generates immediate revenue with zero acquisition cost, which funds the rest of the funnel.
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## The step most businesses skip β qualifying customers
Ryan Deiss calls this the Crazy Filter, and it is one of the most valuable things in the playbook.
Not every customer is worth acquiring. Before you build your funnel, you need to decide exactly who you want to attract β and who you want to keep out. The Crazy Filter asks:
- Are they already getting some results, or are they starting from zero?
- Are they spending money on their business right now?
- Do they have more than one product or service, or are they willing to create more?
- Do they have a budget to experiment and grow?
- Do they have existing customers you could help them sell to?
The filter exists to protect your funnel from the wrong people. A customer who can't afford to buy more than once, who expects miracles, or who has no budget for growth is not a profitable customer β no matter how much they say they want what you're selling.
Build your funnel for your best customer. Market to your best customer. Turn away everyone else.
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## What to do with this if you run a small business
You do not need to build all five stages at once. Start with the one that will generate cash fastest.
If you have existing customers β start with the return path. Write three emails. Send them to your current customer list. Offer them something relevant. See what happens.
If you don't have a list yet β start with a lead magnet. What is one problem your best customers have that you can solve in a one-page PDF, a short video, or a simple checklist? Give it away in exchange for an email address and start building your list.
Once you have those two working, build the tripwire. Then the profit maximiser. Then connect them all.
The whole thing does not need to be complicated. A cafΓ©, a tradie, a coach, a retailer β every one of them can build a CVO funnel with basic tools. The framework is the same. Only the specifics change.
The businesses that do this are the ones that can afford to advertise because they make their money back faster. They are the ones that grow because every customer they acquire is worth more. They are the ones that survive because they are not completely dependent on the next new customer walking through the door.
That is what the CVO funnel does. Build it.
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Here's how Ryan Deiss thinks about customer value β and why the business that spends the most to get a customer almost always wins. Worth 5 minutes of your time π
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