[et_pb_section fb_built=”1″ _builder_version=”4.7.6″ _module_preset=”default” custom_padding=”21px|||||” global_colors_info=”{}”][et_pb_row _builder_version=”4.14.8″ _module_preset=”default” max_width=”700px” custom_padding=”2px||4px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.7.6″ _module_preset=”default” global_colors_info=”{}”][et_pb_button button_url=”\/en\/news\/” button_text=”Back to the news page ” module_class=”btn-back” _builder_version=”4.14.8″ _module_preset=”default” custom_button=”on” button_text_color=”#001194″ button_bg_color=”rgba(0,0,0,0)” button_font=”||||on||||” button_icon=”#||divi||400″ button_icon_placement=”left” button_on_hover=”off” hover_enabled=”0″ global_colors_info=”{}” button_text_color__hover_enabled=”off|hover” custom_padding__hover_enabled=”off|desktop” custom_padding__hover=”|||59px|false|false” sticky_enabled=”0″][\/et_pb_button][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.7.6″ _module_preset=”default” max_width=”700px” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.7.6″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.9.0″ _module_preset=”default” header_font_size=”46px” header_line_height=”1.4em” header_2_font=”|700|||||||” header_2_text_color=”#000a54″ header_2_font_size=”27px” header_2_line_height=”1.3em” header_3_text_color=”#000a54″ header_3_font_size=”25px” header_3_line_height=”35px” header_4_text_color=”#000a54″ header_4_font_size=”21px” header_4_line_height=”29px” global_colors_info=”{}”]<\/p>\n
However, a business needs more than a dream to believe in; It needs to be financially viable. And a crucial part of financial viability is to be profitable on a customer level, allowing you to scale and eventually generate a profit overall.<\/p>\n
Understanding customer lifetime value (CLTV) is key to any successful company. It\u2019s crucial to a building, scaling and managing your business. This business concept consists of three main parts: the acquisition cost, the service cost and the revenue from the customer paying for the service. Let\u2019s start with the first step: acquiring customers.<\/p>\n
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Even if your business is ready to change the world, customers don\u2019t just line up to do business with you – it\u2019s going to cost you. The cost associated with acquiring a new customer includes typically:\u00a0<\/strong><\/p>\n Here is a key point to remember:\u00a0<\/span>The more money spent to add customers, the lower the customer profitability and the greater the likelihood of having a negative gross margin overall<\/strong>. So, identify right away how to get the most profitable customers for the lowest acquisition cost. Usually, casting a wide net across many channels and then determining what\u2019s most profitable will help you know where to put your marketing and sales efforts. If possible, try and defray as much of the acquisition cost over time (e.g., paying the commissions for customers added in instalments).<\/p>\n Because customer acquisition can make or break a company, marketing departments should be as numbers-driven as the finance department to hone in on quality customer leads. Remember,\u00a0<\/span>these quality leads eventually become quality customers<\/strong>. So measure the spend-to-lead generation by channel to identify what\u2019s most cost-effective for acquiring customers.<\/p>\n The last opportunity in acquisition cost is a bit trickier: building \u201cacquisition infrastructure\u201d. This means making one-off investments into things that generate ongoing leads for a low-recurring cost. Things like referral websites, affiliate networks, partner agreements and memberships in organisations can introduce you to potential customers. Doing so will give you the advantage of enabling you to scale your marketing investment.<\/p>\n <\/p>\n Understanding all of the costs of keeping your customers happy will keep your company\u2019s head above water. The service cost includes the customer support team, software licenses, operations activities, etc. and are generally based on units allocated by processes and timing.<\/p>\n Consider automation for helping with the service cost. Anyone not hiding beneath a rock knows that automation is changing how we do business. And in the financial-service business industry,\u00a0<\/span>automation continues to drive down costs<\/strong>, whether unit-cost per service or per product offered.<\/p>\n Innovations in automation have focused on reducing the cost of maintaining and serving customers. For example, just about all aspects of servicing customers has moved online, as well as to mobile. With what result? An increase in the productivity of small teams by enabling them to provide better service and to serve more customers per team member. Here at Factris too, we automate what can be automated so our team can give more focus on personal contact with our clients.<\/p>\n If your business is still primarily people-based, analyse what can be automated – but only if it\u2019s worth the investment. In this case, the return on investment is often reallocating people to do things that they would enjoy more. A number of software as a service (SAAS) providers are making it easier to do business across a broad spectrum of industries.<\/p>\n <\/p>\n You\u2019ve optimised your acquisition cost, and automation is helping with a large portion of your customer service cost. What now?<\/p>\n The most important variables left are:<\/p>\n Never forget:\u00a0<\/span>Your customers are your greatest assets<\/strong>. In order for your business to succeed, you need to focus on them and take the best possible care of them within a reasonable service cost.<\/p>\n Why are happy customers so important to a business?<\/p>\n In a recurring revenue environment, there is a huge difference between the net present value of a customer over 12 months compared to over 48 months. You can gradually write off the acquisition cost over a long time and give yourself a much better return-per-customer.<\/p>\n In many industries, you can take averages to see over time how long customers stay. In our business, we have the benefit of certainty, with contracts of up to 48 months. These contracts enable us to pass on extra benefits to our customers – mostly in the form of discounts – to encourage customers to sign up for a longer-term.<\/p>\n <\/p>\n In a recurring revenue business, churn (the loss of customers using your services) can be toxic to the sustainability of your business. Consider: You\u2019ve already incurred the cost of acquiring these lost customers, so their future profitability is quite high. In addition, you now have to pay to replace the churned customer and pay for another customer to keep the company growing. All of these negative effects of churn can kill the profitability of your business.<\/p>\n While some churn is unavoidable, you should\u00a0<\/span>actively manage the risk of losing your most coveted customers<\/strong>. So when calculating the cost to service, make sure there\u2019s a provision for customer retention that\u2019s focused on the high value of your existing customers.<\/p>\n <\/p>\n Understanding customer lifetime value is crucial for entrepreneurs who are managing a business day to a day. So don\u2019t delay in implementing it on the ground floor; make this a part of your business culture, so your company constantly measures and improves. Do so by setting up your key metrics once and then track them over time. Try to make improvements as you go along and see how they impact your financial performance.<\/p>\n The point of all of this careful analysis isn\u2019t to stop dreaming; on the contrary – dream big! The future belongs to those who innovate and work hard to make a great idea happen. Just be sure that you have all of the financial pieces in place – especially the pieces that affect your customers, who are ultimately the ones that turn your dream into a reality.<\/p>\n [\/et_pb_text][\/et_pb_column][\/et_pb_row][et_pb_row _builder_version=”4.14.8″ _module_preset=”default” max_width=”700px” custom_padding=”2px||4px|||” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.7.6″ _module_preset=”default” global_colors_info=”{}”][et_pb_button button_url=”\/en\/news\/” button_text=”Back to the news page ” module_class=”btn-back” _builder_version=”4.14.8″ _module_preset=”default” custom_button=”on” button_text_color=”#001194″ button_bg_color=”rgba(0,0,0,0)” button_font=”||||on||||” button_icon=”#||divi||400″ button_icon_placement=”left” button_on_hover=”off” hover_enabled=”0″ global_colors_info=”{}” button_text_color__hover_enabled=”off|hover” custom_padding__hover_enabled=”off|desktop” custom_padding__hover=”|||59px|false|false” sticky_enabled=”0″][\/et_pb_button][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.7.6″ _module_preset=”default” background_color=”#000A54″ custom_padding=”20vh||20vh||true|false” global_module=”2087″ saved_tabs=”all” global_colors_info=”{}”][et_pb_row _builder_version=”4.7.6″ _module_preset=”default” custom_padding=”0px||0px||true|false” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.7.6″ _module_preset=”default” global_colors_info=”{}”][et_pb_text _builder_version=”4.9.0″ _module_preset=”default” header_font=”|700|||||||” header_text_color=”#ffffff” header_font_size=”46px” header_line_height=”2em” header_2_font=”|700|||||||” header_2_text_color=”#ffffff” header_2_font_size=”46px” header_2_line_height=”2em” header_3_font=”|700|||||||” header_3_text_align=”center” header_3_text_color=”#ffffff” header_3_font_size=”25px” header_font_tablet=”” header_font_phone=”” header_font_last_edited=”on|desktop” header_line_height_tablet=”1.8em” header_line_height_phone=”1.4em” header_line_height_last_edited=”on|phone” header_2_font_size_tablet=”” header_2_font_size_phone=”32px” header_2_font_size_last_edited=”on|tablet” header_3_font_tablet=”” header_3_font_phone=”” header_3_font_last_edited=”on|phone” header_3_line_height_tablet=”” header_3_line_height_phone=”1.8em” header_3_line_height_last_edited=”on|phone” global_colors_info=”{}”]<\/p>\n [\/et_pb_text][et_pb_button button_url=”\/en\/eligibility\/” button_text=”See if I qualify” button_alignment=”center” module_class=”btn-tertiary-2″ _builder_version=”4.14.8″ _module_preset=”default” custom_button=”on” button_text_color=”#ffffff” button_bg_color=”rgba(0,0,0,0)” button_font=”||||on||||” button_icon=”$||divi||400″ button_icon_color=”#ffffff” button_on_hover=”off” custom_margin=”||20px|||” custom_padding=”0px|0px|0px|0px|true|true” global_colors_info=”{}”][\/et_pb_button][et_pb_button button_url=”https:\/\/onboarding.factris.com\/en\/sign-up” button_text=”Finance my invoices” button_alignment=”center” _builder_version=”4.13.0″ _module_preset=”default” button_icon=”$||divi||400″ button_icon_color=”#353540″ button_on_hover=”off” custom_margin=”||18px|||” custom_padding=”10px|40px|10px|25px|true|false” global_colors_info=”{}” custom_padding__hover_enabled=”on|hover” custom_padding__hover=”|50px|||true|false”][\/et_pb_button][\/et_pb_column][\/et_pb_row][\/et_pb_section]<\/p>\n","protected":false},"excerpt":{"rendered":" Some companies start with a great idea. They might try to make it happen, to \u201cfollow the dream\u201d, which can make for a wonderful story.\u00a0 However, a business needs more than a dream to believe in; It needs to be financially viable. And a crucial part of financial viability is to be profitable on a […]<\/p>\n","protected":false},"author":1,"featured_media":20629,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"\n Advisory board<\/strong><\/p>\n\n\n\n Brian Reaves <\/strong>Chief Executive Officer<\/p>\n\n\n\n Serial entrepreneur and investor in the mobile and payments space. Brian was involved in building 21 prior businesses including 15 mobile networks and 4 payment companies.<\/p>\n\n\n\n Adam Posma <\/strong>Founder and Chief Product Officer of ClubCollect<\/p>\n\n\n\n Adam founded ClubCollect in 2013 - a provider of membership fee collection services for sports clubs. He started his career in wealth management at BNP Paribas.<\/p>\n\n\n\n Dr. Tom F. Lesche <\/strong>Principal at Speedinvest<\/p>\n\n\n\n Tom started his career in investment banking. Most recently, he was a Vice President at Morgan Stanley in London, advising financial technology companies on a variety of capital markets and M&A transactions. At Speedinvest, he solely focuses on investments in European fintech companies.<\/p>\n\n\n\n Donatas Juodelis <\/strong>Founder of Debifo<\/p>\n\n\n\n Donatas started his career as a lawyer but quickly moved to entrepreneurship and investments. Co-founded IT company INNTEC, co-founded factoring company Debifo and a couple of other successful startups. In most of the companies, Donatas was responsible for business and corporate development.<\/p>\n\n\n\n Faisal Hakki <\/strong>Managing director at AB Ventures<\/p>\n\n\n\n Faisal is Managing Director at AB Ventures, the FinTech focused, early-stage Venture Capital arm of Arab Bank. Prior to joining AB Ventures, Faisal was CEO at Oasis500 \u2013 the leading seed-stage investment fund and accelerator in Jordan. Faisal has also held senior positions at Accelerator Technology Holdings, Arab Advisors Group and Fastlin.<\/p>\n\n\n\n Brian Reaves <\/strong>Chief Executive Officer<\/p>\n\n\n\n Serial entrepreneur and investor in the mobile and payments space. Brian was involved in building 21 prior businesses including 15 mobile networks and 4 payment companies.<\/p>\n\n\n\n Adam Posma <\/strong>Founder and Chief Product Officer of ClubCollect<\/p>\n\n\n\n Adam founded ClubCollect in 2013 - a provider of membership fee collection services for sports clubs. He started his career in wealth management at BNP Paribas.<\/p>\n\n\n\n Dr. Tom F. Lesche <\/strong>Principal at Speedinvest<\/p>\n\n\n\n Tom started his career in investment banking. Most recently, he was a Vice President at Morgan Stanley in London, advising financial technology companies on a variety of capital markets and M&A transactions. At Speedinvest, he solely focuses on investments in European fintech companies.<\/p>\n\n\n\n Donatas Juodelis <\/strong>Founder of Debifo<\/p>\n\n\n\n Donatas started his career as a lawyer but quickly moved to entrepreneurship and investments. Co-founded IT company INNTEC, co-founded factoring company Debifo and a couple of other successful startups. In most of the companies, Donatas was responsible for business and corporate development.<\/p>\n\n\n\n Faisal Hakki <\/strong>Managing director at AB Ventures<\/p>\n\n\n\n Faisal is Managing Director at AB Ventures, the FinTech focused, early-stage Venture Capital arm of Arab Bank. Prior to joining AB Ventures, Faisal was CEO at Oasis500 \u2013 the leading seed-stage investment fund and accelerator in Jordan. Faisal has also held senior positions at Accelerator Technology Holdings, Arab Advisors Group and Fastlin.<\/p>\n\n\n\n <\/p>\n","_et_gb_content_width":"2880","footnotes":""},"categories":[16],"tags":[],"yoast_head":"\n\n
Service Cost<\/strong><\/h2>\n
Net Customer Profits<\/strong><\/h2>\n
\n
\n
Churn can kill<\/strong><\/h2>\n
Managing by measuring<\/strong><\/h2>\n
Focus on telling your business story<\/h2>\n
Trade your invoices for working capital by factoring<\/h3>\n