Episode 474

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Published on:

7th Mar 2023

What Is The Law of Inverse Profitability™?

In this episode of Perpetual Traffic, Ralph and Kasim discuss the importance of customer acquisition and how to make more money with less profit. They delve into the concept of lifetime value customer (LTV) and cost per acquisition (CAC), which are crucial data points for determining profitability ratios. They also touch on the law of inverse profitability, which states that businesses cannot scale if they still want a high net operating income. They provide examples from companies like Tesla and Apple to illustrate their points. Additionally, they share their own experiences with testing new theories on themselves and discuss the benefits of organic social media over paid traffic. Overall, this episode offers valuable insights for businesses looking to increase revenue and profitability.

In This Episode, You'll Learn:

  • 00:00:00 - Live Meetings On Air: Engage With Your Audience in Real Time
  • 00:04:03 - Understanding Earnings Before Interest, Taxes, And Amortization (EBITA) For Business Growth
  • 00:07:21 - The Power Of A Botched Launch: How A Free Book Led To Viral Success
  • 00:10:41 - The Collaborators Behind A Bestselling Book: Insights From a Publishing Expert
  • 00:13:50 - Customer Acquisition: The Lifeblood Of Your Business
  • 00:16:51 - The True Cost Of Marketing: Beyond Ad Spend
  • 00:20:22 - The Power of Organic Social Media: Testing Its Effectiveness on Lead Generation
  • 00:24:35 - Impressed with Apple's Real Estate and Overhead Costs: Lessons for Business Owners

Links and Resources:

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Mentioned in this episode:

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About the Podcast

Perpetual Traffic
Helping marketing directors and CMOs master paid traffic and conversions!
Perpetual Traffic is a twice weekly podcast that shares cutting-edge strategies on acquiring leads and sales for your business. The show is produced by Tier 11 and hosted by Ralph Burns and Lauren Petrullo. Traffic is the act of putting your product, service, or message in front of your target audience…it’s the act of acquiring customers online while also building goodwill, and is the lifeline of any business. So, whether you’re a media buyer yet to create your first Facebook or Instagram ad, a Director of Marketing or CMO managing a team of marketing specialists, or a CEO growing your business on your own, you’ll discover actionable strategies that can be applied today. Perpetual Traffic combines the traffic strategies developed at Tier 11 with the real-life agency experience of the hosts. Listen to real stories of business owners and marketing executives just like you how they overcame struggles with digital marketing and online advertising. Learn how to make Facebook advertising, Instagram advertising, YouTube advertising, Twitter advertising, Google AdWords advertising, LinkedIn advertising, (and more) work for your business.

About your host

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Kasim Aslam