The Trap of Vanity Metrics
Gresham Harkless opens this special episode by challenging the common obsession with followers, likes, and website visits. While these numbers might look impressive on paper, he identifies them as “vanity metrics” that fail to indicate the true health of a business because they do not pay the bills. Harkless argues that many founders get caught up in measuring the wrong things, ultimately ignoring the core financial realities that separate a sustainable company from an “expensive hobby”.
Mastering the LTV to CAC Ratio
To build a scalable and meaningful business, Harkless emphasizes one critical metric: the ratio of Customer Lifetime Value (LTV) to Customer Acquisition Cost (CAC). He explains that if you are spending hundreds of dollars to acquire a customer who only returns a fraction of that cost, you are “literally paying to lose money”. However, when your LTV is at least three times your CAC, you have a “real business” where every dollar invested comes back multiplied, creating a foundation for genuine scale.
Practical Wisdom for the CEO Journey
Drawing from over 1,600 interviews and a decade of experience, this segment provides “CEO nuggets” designed to strengthen the foundational principles of any business. Harkless reminds listeners that success is rarely a straight line, but rather a “plate of spaghetti,” requiring leaders to “run their own race” rather than follow someone else’s blueprint. Guided by the equation “Visibility plus Resources times Connections equals Success,” this episode offers practical wisdom that founders can apply immediately to ensure their business is moving toward long-term victory.
Previous Episode: https://iamceo.co/iam2709-prioritizing-retention-building-a-sustainable-business-foundation/
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- Is franchising right for you? Check this out to see: bluestarfranchise.com/assessment
- Franchise CEO (A CBNation Site – coming soon) – franchiseceo.co
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Trancription:
Gresham Harkless 00:00
Now, what actually matters? One metric your customer Lifetime value to customer acquisition cost ratio LTV to cac. That's what matters. Now, if you're not familiar with that, this is exactly what that means. How much does a customer spend with you over their lifetime compared to how much it costs you to acquire them? If you're building something meaningful, you're in the right place. This is the I Am CEO Podcast. I'm gresh, and for over a decade I've had the honor and the privilege of Learning directly from CEOs, entrepreneurs and business owners just like you on how to build. After recording more than 1600 episodes, one thing has become clear. Success isn't about following someone else's blueprint. And as I like to say on the show, if you run your own race, you can't lose. Even when we feel the journey should be a straight and linear path, what I've come to find out is success is a lot more like a plate of spaghetti. So in this special segment and episode, I'm starting to curate and share some CEO hacks and CEO nuggets that I've been dying to share. Drawn from thousands of episodes with phenomenal guests that have provided awesome value on the show, but also my 10 years of business experience as well too. These lessons are designed to strengthen the foundational principles that every business is built on and guided by a simple equation that we always go back to with our content. Visibility plus resources times connections equals success. This is practical wisdom you can apply almost immediately. So be sure to check out the show notes for more resources and next steps on how to level up. And of course, enjoy this special episode of the I Am CEO podcast.
Gresham Harkless 01:45
Ever tracking followers, likes, website visits, thinking that's going to tell you how healthy your business is, I've got some news for you. You're measuring their own things. Most founders get caught up in vanity metrics. They feel good, they're very impressive on paper, but they don't pay the bills. Now, what actually matters? One metric your customer Lifetime value to customer Acquisition cost ratio LTV to cat. That's what matters. Now, if you're not familiar with that, this is exactly what that means. How much does a customer spend with you over their lifetime compared to how much it costs you to acquire them? Now, if you're spending hundreds and hundreds and hundreds to get a customer that only gives you $5 or $50 back, you're in some trouble. Think about it. You're ultimately literally paying to lose money. But if your LTV is three times your CAC or higher, you've got a real business, and overall, that's the signal. Every dollar you invest comes back multiplied. That's sustainable, and ultimately, that's scale. Track the right number, ultimately let it guide your decisions. And that CEO hack separates real businesses from expensive hobbies.
