Businesses cheat all the time, and that's ok. By "cheating," all a firm is doing is approaching a common problem from a different angle, such that their creative solution generates an edge ahead of the competition.
It's somewhat like a ski lift or a snow machine on a mountain. You can either walk up the mountain and wait for natural snowfall, or you can use a few modern tools to get the job done quicker.
If you're a startup or a company that has yet to make a profit, a variety of tactics can be used to extend your existing cash holdings. While it's unlikely that you can "evade profitability," you can shift focus towards a series of creative tweaks that shift your budget towards profitability given limited changes to your acquired cohorts.
Cheat #1: Improve cohort layering momentum
I've touched on this before but wanted to repeat it here because of its underlying importance. If you can improve the core metrics of your cohort, you will by default generate more revenue in the future. At a constant state of acquisition, your cohorts will layer faster. A few ways to achieve this are:
- Increase average order value: generate more revenue each time customers convert
- Increase speed at which first time purchases convert: generate revenue faster
- Increase speed at which subsequent purchases convert: generate future revenue faster
- Reduce customer churn: reducing churn allows you more opportunities to convert and re-convert customers in the future
Cheat #2: Reduce overhead/marketing ratio
Altering the ratio of spend between marketing and overheads within time-period constraints will change the point when your cohorts reach EBITDA breakeven.
By decreasing overheads: each cohort will be required to pay off less overheads once marketing spend is paid off. As a result the cohort becomes profitable faster.
By increasing marketing spend: there will be more cohorts that can pay for a fixed amount of overheads, making it easier for any single cohort to pay its proportional share of EBITDA contribution beyond marketing costs. However, you should only pursue this option if you have the ability to acquire new cohorts that will perform as well as existing ones.
Cheat #3: Extend/delay payment terms
When you constrain your cohort analysis against your LTV threshold, you create a barrier in time within which your cohort must pay off for itself. However, if you have flexibility on payment terms with your marketing spend (as is frequent with print media and some forms of digital such as affiliates), you can generate revenue that contributes to daily overheads and marketing costs before you actually pay back marketing expenses.
The payment-deferment methodology is frequently used outside of marketing, such as in product purchasing functions where a company doesn't pay its suppliers until a future date after the delivery of goods.
While this method is unlikely to be popular with your publishers, it has the potential to significantly extend your LTV threshold and associated cash runway. As you extend payment terms into the future, you allow for additional future cohorts to layer revenue on top of your existing customers.