The cohorts you acquire fall into one of two buckets: profitable or unprofitable. Defining triggers for increasing marketing spend creates a framework for managing marketing budget expectations.
Everything is a test
Defining your cohort profitability thresholds is a good start to optimizing your marketing campaigns. Once you've nailed your cohort-based LTV analysis, you'll be faced with a series of questions around how to distribute marketing budget. My methodology for budget allocation is to continuously scrutinize all acquisition efforts.
Ways to cheat profitability
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.
Optimize marketing against cash position
We've previously discussed the importance of analyzing marketing cohorts from the perspective of lifetime value. One of the main constraints for assessing cohort profitability thresholds deals with defining your maximum LTV payback period. You can use this information to create rules for marketing campaign optimization.