I've bought 35+ companies in last 5 years.
The pattern is obvious once you see it: Some businesses print money. Others barely survive.
The difference comes down to one metric: how much each customer is worth over time.
Whether you're building to sell or building to keep, here's how to make your customers worth more:
Step #1: Know what your customers are actually worth
Most people think in "monthly revenue." Winners think in "lifetime value."
Formula: LTV = Average Order Value × Purchase Frequency × Customer Lifespan
Bad business:
• Customer pays $100
• Buys once
• LTV = $100
Great business:
• Customer pays $100
• Buys monthly for 3 years
• LTV = $3,600
36x difference. Same price point. Same customer. Different business model.
Step #2: Calculate your LTV:CAC ratio
This tells you if you're building something profitable or just treading water.
LTV:CAC = Lifetime Value ÷ Customer Acquisition Cost
The breakdown:
• Less than 3:1 → Burning money
• 3:1 to 5:1 → Healthy
• 5:1+ → Printing money
If you spend $100 to get a customer worth $300, you're barely profitable.
If you spend $100 to get a customer worth $800, you're building an asset.
Step #3: Keep customers longer
If customers stay 2x longer, LTV doubles. Simple math.
• Nail onboarding: They bought based on a promise. Deliver that promise in the first 7 days.
• Increase stickiness: Integrate into their workflow. Example: Dropbox becomes sticky because your files live there.
• Monitor usage proactively: If someone hasn't logged in for 14 days, reach out before they cancel.
Real example: Client of mine tracked their customers on LinkedIn. When someone changed jobs, they reached out to both the old team AND the new company. Retained both.
Step #4: Get customers buying more often
• Usage-based pricing: Basic tier = 5 visits/week. Premium = 10 visits/week.
• Add complementary products: What do customers buy before/after using you? Sell that.
• Shift to subscriptions: $5,000 one-time project = $5K LTV. $500/month for 3 years = $18K LTV.
Step #5: Increase what they spend
Implementation fees: Charge for onboarding/setup (standard in B2B)
Upsells at purchase: "Customers who bought X also need Y"
Premium tiers: Basic/Pro/Enterprise. Same product, different support levels.
Step #6: Pick ONE lever and execute for 90 days
You just learned three ways to increase LTV:
1. Keep customers longer
2. Get them buying more often
3. Increase spend per purchase
Don't try all three at once. Pick the one with highest return for least effort. Execute. Measure. Move to the next.
That's how you build a business worth buying. Or better yet, a business worth keeping.
-DM
P.S. Want to know what your business is actually worth? I built a valuation calculator that shows you exactly how investors would value your company based on these metrics. Comment "VALUE" and I'll send you the calculator plus the breakdown of what makes businesses sell for premiums. My gift to you 👊