This simple mathematical "laziness" can make ALL the difference in your ad strategy (+ Best Profit Trackers Update)
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There’s one tiny bit of mathematical laziness that silently kills your ad strategy: It completely changes your break-even ACOS. Scenario: Profit per unit: $20 Average selling price: $75 Customer Lifetime value (LTV): 2.5 units Calculation 1: Without LTV (= only 1 unit purchased by customers on average throughout their lifetime): Break-Even ACOS = Profit per unit (x LTV) ÷ Average price = 20 ( x 1) ÷ 75 = 26.7% ---- Calculation 2: With LTV (2.5 units on average per customer) Break-Even ACOS = Profit per unit × LTV ÷ Average price = 20 × 2.5 ÷ 75 = 50 ÷ 75 = 66.7% As you can see, the potential difference is CRAZY. If you knew your real break-even ACOS was 66%, not 26%, your ad strategy would change overnight. Suddenly, you can actually compete for the top keywords with the top advertisers in your niche. Suddenly, you're not just a bystander scrapping for the cheap "low hanging fruits" search terms. Suddenly, you're one of the big boys or girls dominating your niche. While Amazon makes it possible to calculate LTV (check the Customer Loyalty Analytics dashboard), it's rather cumbersome and messy. But if you want the easiest way to track your real LTV — and dozens of other profit-driving metrics — check out My Real Profit (includes a 10% discount for 18 months!). And if you want to see which tools are dominating the Amazon profit tracking space right now, watch my latest Amazon Tools League update video. Keep on grinding David P.S. I offer 1:1 coaching to brand owners ready to make the most out of Amazon ads and grow profitably. You'll learn about the systems I use to scale brands, as well as my thoughts on various automation tools that may be too spicy to talk about publicly ;) |