This article is written by Ramanuj Mukherjee, CEO, LawSikho.

LTV stands for Lifetime Value. It is a very important measure for a business. Especially startups. If you ever get to overhear the discussion in the boardroom of a SaaS company, or a startup trying to get funded, or investment banker having a discussion with the CEO and CFO of a company wanting to get listed on a stock exchange, you are likely to come across this term.

Every customer of every business has an LTV. How much profit does a single customer/ user generate over the years for a business? That determines its valuation, and how much investors are willing to pour in.

Have you ever wondered why small startups got massive valuations and were allowed to spend like crazy, giving lots of discounts to customers for years?

The answer hides in LTV of a single customer for those businesses.

Take Uber for example. For the first two years they entered India, they spent billions of dollars acquiring drivers and customers. It looked illogical and insane to most people. Why is this American company spending like this in India, making no profit for years, and just keep giving away money to its driver-partners and give so much discount to users?

It is because they knew even if it costs a few thousand rupees to acquire a customer, they will later make it up because LTV of a single customer is lakhs of rupees!

For instance, if I spend 100 rupees a day on Uber, I am basically going to spend 36,000 per year on it. In reality, I tend to spend much more on Uber.

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I am using Uber for the last 5 years. That means I have spent at least 1.6 lakhs on Uber or not more. In the next 10 years, I am likely to spend 3-5 lakhs on Uber if not more. What is the problem for them to acquire a customer like me by giving me discounts over 50,000 in the first two years, and get me hooked to the service?

Totally makes great sense, right? Once you understand the LTV, then the initial discounts look totally justified.

This is the same logic as to why VCs and PE investors give billions of dollars to startups to acquire customers aggressively, seemingly ignoring economic realities. 

Well, I am sure you are wondering at this point about how we as lawyers, and individuals can use this same tactic. Calculate the LTV of a user or a project, and then make investments upfront so that you make lots of money over the long term.

Let me tell you how we use it in LawSikho.

First, we give away tons of content for free. We want every lawyer in the country to read our books, blog posts for free. Now we are heavily investing in our YouTube channel. You would soon see that LawSikho has become the biggest legal youtube channel on the planet. 

It took us 10 years to become one of the biggest law blogs in the world, slowly but steadily.  

We will also become the biggest TikTok channel, LinkedIn page, Instagram page, and any other major social media that would exist, in the subdomain of the law, legal industry, and legal career. It’s inevitable given the strategy we take. 

Why spend so much time and effort on this kind of thing?

Let me give you an example. We get 2400 leads for various courses on an average from one of our blogs every month. I would leave you to wonder how many lakhs of revenue this generates.

Similarly, when someone buys a course from us, it is not the final sale. We know that it is just a beginning. If someone buys only one course from us, we must have failed in delivering sufficient value to that person.

We succeed when they buy one course after another. We succeed when they refer their colleges, organizations, colleagues, and friends to buy courses from us. 

We are successful when after buying a certificate course and benefitting, someone buys a diploma course and eventually buys a whole Master Access Library or a Corporate Law Library. That can only happen if we can continuously delight them and benefit them tremendously over the years. 

Currently, 10% of the people who buy an entry-level lawsikho course, go on to buy a library eventually. We are trying to take it up to 20% in the coming 6 months. For this, we are heavily investing in products and services. We are increasing our team size rapidly, adding new divisions so that we can make more and more people delighted, excited and so happy that they keep buying more courses from us.  

The target LTV of a LawSikho student is 1.5 lakh at present over the next 5 years. We hope it will go up as we add new courses, new services, and new benefits.

What is the LTV of a new client for you? Can you invest more in acquiring a client if you knew the maths better?

What is the LTV of a course you will do from us? Let’s say you learn contract drafting from us, and then begin to draft one contract per month, and charge 10k per contract. Over 10 years, how much will you make? 

What is the LTV of a junior you may hire? It may make sense to pay them more in the beginning, spend more time training them, if they can be retained over many years, generating a large LTV for you as they become more skilled and more profitable over the years.

Working hard in the beginning, spending more in the beginning, investing more, in the beginning, makes sense because LTV justifies the short term high cost. 

If you understand LTV well and begin calculating LTV of every project you are pursuing now, which ones will you abandon and which ones will you focus more on?

Here are some courses we are offering currently, do look at their LTV as far as you are concerned apart from looking at their price tags:

DIPLOMA

Diploma in Cyber Law, Fintech Regulations and Technology Contracts

Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution

EXECUTIVE CERTIFICATE COURSES

Certificate Course in Prevention of Sexual Harassment at the Workplace

Certificate Course in Capital Markets, Securities Laws, Insider Trading and SEBI Litigation

Certificate Course in Labour, Employment and Industrial Laws for HR Managers