AARRR: same ad spend, four times the profit
I take a growth-hacking approach because raising the ad budget is the expensive way to grow. Acquisition, activation, revenue, retention, referrals — AARRR. My co-founder built a calculator that puts those numbers on one screen. I was spending about €5k a day on ads and working toward €10k. The question on the sheet is not how high that daily number can go. It is how much profit you keep from the same spend.
Raising daily spend works. It is the expensive lever
A lot of companies only have one move: spend more to get more customers. Profit does go up. In the model, lifting the day from €10k toward €15k added about €1.5 million of profit — and you are writing a much bigger cheque every morning. CPA also climbs as you go more aggressive. The sheet has a reserved spend and an aggressive spend. I was pushing the aggressive one.
All of the figures are euros. A pessimistic row — €10k a day, €80 to acquire a customer, €78 average spend — still showed about €1.5 million each per year. That is a low view. Reality sat better than that.
€80 CPA versus €60 CPA is €1.7 million of profit at the same spend
Hold daily spend still. Drop cost per acquisition from €80 to €60. The gap is about €1.7 million of profit. You did not buy more traffic. You paid less for each customer who already arrives.
Even €1 matters. On a row around €3.095 million, moving CPA from €80 to €79 moved year-one revenue by about €140k and profit by about €66k. You will not stop at one euro. That is the point. Conversion-rate work is how you take more than a euro: social proof, reviews, testimonials, website copy. The more traffic you already buy, the larger that one-euro line becomes.
€2 more monthly spend was almost €300k of revenue
Leave CPA at €80 — already too high — and lift what a customer spends by €2 a month. Revenue on that row went to 11.933. The add was just under €300k. We had just shipped small upsells. Average monthly spend had already moved up.
Two percent less churn was €300k of profit
Churn was high because the ads were aggressive. We were using that to see what customers complained about, then putting investment there. Bringing churn from about 20% to 18% added about €600k of revenue and €300k of profit. Two percent off churn was a 10% lift in yearly profit on that sheet.
Work all five AARRR metrics before you double the budget
Growth hacking is not one metric. It is five: acquisition, activation, revenue, retention, referrals. Take CPA to €65 — already close to where we sat — monthly spend to €82, and leave churn high. Revenue roughly doubled. No extreme changes.
To hit the same €6 million of profit by spend alone, the sheet wanted daily ads doubled to €20k. Easier work: CPA toward €55, monthly spend toward €85, churn toward 8%. That row was just under €9.5 million of profit in year one and about €22 million in year two.
Where we actually sat: CPA about €65, monthly spend about €82, churn about 16%. Retention is the large one. Referrals were not even in the calculator yet. Pull churn to 8% on top of the rest and year-one profit was about €11 million. CPA to €50 added about €1.3 million of revenue. Same daily spend. About four times the profit. One pass on the sheet added about €9 million of profit just by moving the levers.
Churn compounds. A year-two row at €55 CPA, €83 monthly spend, 15% churn printed about €21 million. The second year is where retention shows up.
A competitor on €10k a day can match your €40k a day
If they work these metrics and you only raise budget, you can sit at €40k a day and they can sit at €10k and post the same result. You will not catch them by buying more of a worse funnel. Once you are spending real money on ads — even a decent amount — put the effort into the five numbers, not the sixth line that is the budget.
Team of 40 and a 900 m² office
The project had grown to about 40 people. I had just taken a 900 square metre office. The plan was a small YouTube studio in it, and more time on this kind of work. I had also already filmed a separate video: zero to $100k monthly recurring revenue in about 45 days. It was sitting on the drive, unedited.
The calculator is a highlighter. Put CPA, average spend, churn, and referrals on one screen. Move the cheap levers first.
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Transcript
Hey guys it's nathan i'm sorry i haven't made a video in a while um i've been working on a number of different um projects i did actually record a video on the other week of me growing a business from zero to 100k dollars in monthly recurring revenue in about 45 days um but i've been meaning to like edit it and um upload it and i just haven't got around to it yet um but anyway i wanted to talk today just a little bit about like um why we take or why i take a like growth hacking approach in my businesses and why i sort of uh uh yeah this is the reason i take the approach of focusing not only on just like oh let's spend more money and scale out ads um like as much as possible much more of like how can we optimize acquisition activation revenue retention and referrals um so this is a calculator that um my co-founder made and it puts like all of the data right in front of you so rather than just thinking ah to increase revenue and like it sounds so stupid but this is what a lot of people and companies do is it's let's let's increase our ad spend so here if we spend ten thousand um dollars per day currently i'm spending about five um sorry when it says extreme as well you can see the um cpa is going up so i've been playing around with this um it should show like these we could go with quite a reserved spend and this is quite like a high really aggressive ad spend which is what i'm currently working towards um so a lot of companies will like put in like just work on increasing the amount they're spending on getting customers so technically profit is going up um so if we put it up to 15 profit's gonna go up by a total of like 1.5 million but you're going to be spending loads more money every day um whereas instead here so cpa is is cost per um it's our cost per conversion so cost to acquire a customer if we set a very high amount of 80 um dollars per customer um actually sorry this is all in euros 10 000 euros per day 80 euros to acquire a customer average spend is 78 euros um this is also a very like pessimistic view really it's it's way below that and still we stand to make one and a half million dollars each per year but really it's something more like down here um and as there's a total of like 1.7 million different in profit without spending any difference on daily spend or spending the same amount of money um compared to acquiring like 80 euros compared to uh acquiring a like 60.
Um it obviously has a direct impact on how much money you you make um but the other really interesting thing is even just so currently we're at like 3.095 if we just decrease the cpa by one dollar so 79 we see a 60 6 000 difference in profit uh in revenue uh what was that that was a hundred and forty thousand dollar difference in uh in revenue in the first year from a one dollar difference in reducing your cpa um and obviously you're not going to reduce your cpa just by one dollar it's going to like you should be able to do it significantly more than that so put a real focus on like not only just on optimizing ads to reduce cpa but this is why i always talk about things like conversion rate optimization adding things like social proof reviews testimonials um yeah focusing on conversion rate optimization website copy everything like that if you can reduce your your cpa just by one dollar which you're going to make an extra or like in this scenario we'll make an extra 150 obviously this has a bigger effect on the more money or the more traffic you're bringing to the page um but it's just really easy just to like highlight it here well not only that even if we keep cpa at 80 euros which is really really high and we just focus on optimizing the amount of money a customer spends so the same way if we can increase the average order value by um by two dollars uh revenue here eleven point nine three three uh we've added what was that two two hundred thousand uh sorry three hundred thousand just under three hundred thousand dollars in revenue by increasing monthly spend by two dollars which is like a minuscule amount it's it's like it's really easy to do that just adding some little upsells in there we've actually done that recently and our average monthly spend has come up now on top of that if we chuck that back down again if we reduce churn churning like that is a really high churn rate um which we we are like at that currently we have like a really aggressive ads campaign running but with some very easy optimizations we're just doing this to highlight where the issues are so that we know what our customers are complaining about and we know where to focus our um investment in terms of reducing churn so if we bring down churn to like even 18 i'm just interested to see what difference will be here seven hundred thousand dollars six hundred thousand dollars sorry difference in revenue for three hundred thousand dollars difference in profit just by reducing churn by two percent which isn't a big amount um so even just by impacting one of these metrics like a small amount there's a large difference in how much revenue you receive reducing churn by two percent increased yearly profit by ten percent in this amount number it will increase even more but now if we focused on all metrics so reducing this is what growth hacking is all about right it's about optimizing like five different metrics acquisition activation revenue retention and referrals so if we also added uh sorry so if we managed to optimize our cpa down to like 65 which is is already out already average monthly spend up to like 82 um and got a churn rate down to let's even keep it like a high amount let's put that is we we've managed to double the amount of revenue we make without even making two extreme optimizations here like it's this this is why everyone should be following like rather than just thinking let's oh let's just increase how much we're spending and run more marketing you need to focus on like optimization of making sure you're getting the most out of your marketing money because that has a much bigger impact than any of these for example if we to bring that down to the original metrics again for us to achieve six million dollar profit which it just show which was just displaying we would need to spend we would need to double the amount we're spending every day to 20 000 euros whereas rather than doing that we can it's going to be much much easier just to reduce these and really we can get this down to about 55.
This will come up to about 85 and churn we can i think realistically can get down to about eight percent which results in 9.4 just just under 9.5 million dollars in euros a million euros in profit in the first year 22 million euros in the second year um and if we put in like the current metrics that we're at i think we're at about 65 here we're at about 82 and churn is about uh 16 um so still we stand to make this much money this year um however just by like all i'm doing is focusing on these metrics and um so like retention is actually going to have like a really really big impact um but there's another key metric that is missing here as well that we haven't added into this calculator that is um referrals so if we're able to optimize that as well um and increase the number of people that get referred on to us uh like that's also going to have a massive impact on the overall revenue so yeah this is just like a highlighter just like quite a simple thing but really i just wanted to like highlight the reason that you should focus on optimizing these like metrics um even if we got out and got that down to like eight percent yeah it would be 11 million profit in the first year without like and these aren't out the question changes they're perfectly possible cpa maybe even come down to 50 which results in a 1.3 million increase in in revenue um but yeah i just i thought this is like a really interesting calculator it's really easy to like digest how revenues affected spending the same amount of money you're able to 4x um your uh profit like revenue would go up to like 44 or 46 million dollars per year 48 and then even in the next year the churn's gonna have an even bigger effect uh so let me say bring it down to 55 bring this down up to like 83 15.
Uh so in the second year obviously churn has like a i'm sorry that should be don't even know it april yeah in the second year 21 million dollars euros sorry that's pretty insane money so yeah i just hope this is highlighted like why you should not just focus on on even yeah just scaling what you're doing instead like you can really optimize what you're doing even on like a smaller budget it's not going to be quite as insane numbers of these for example i've just added like 9 million euros in profit just by optimizing these metrics here um so it's all like proportional obviously but once like you're spending serious amounts of money on ads you should focus or even like a decent amount of money on ads and marketing you should really put your efforts into um optimization rather than just pushing up this this ads budget um and optimizing these metrics and you're going to see really really good results so um just because i get a lot of people asking like why about like growth hacking and why do we take that approach like i've just just put the figures in front of you it just makes sense there's no other way to to do it and if if you if one of your competitors is working on optimizing these metrics yeah that's a really good way to put it so if one of your competitors is working on optimizing these metrics even if you have like the same even if you're spending way more money than them in order than than you to compete you could be spending 40 000 euros per day uh and your competitor could be spending ten thousand and optimizing these things and getting the exact same results as you and you just you wouldn't be able to keep up um so yeah i hope that's lent a little bit of um insight this is a really interesting project and like we've grown the team to about 40 people now i've i've just taken a 900 square meter office that we're going to be moving to um and then i hopefully i'm gonna have capacity to set up like a little like youtube studio for making some videos and stuff and um getting back to focus on on growth hacking as well um yeah there's another video that i have that i haven't released yet but i'll put that out as soon as i've had a chance to edit it so yeah thanks for watching and uh yeah