FULL CAF

Holidays at my parents’ house are wonderful.

I always expect visits home to bring on a sleepy let down. It’s cozy, all my people are there, familiar – it’s just a deep exhale - ahhhhh.

I always want to take a nap.

But last Christmas I seemed extra sleepy, like barely able to hold my eyes open sleepy. I’d have another cup of coffee, but not feel any more alert. Two days in I realized the cause, it’s half-caf!

My parents, with all the kids out of the house, had switched to half-regular-coffee, half-decaf. But my wife and I, with a bunch of little kids, still need full octane brew. I need that full-caf, straight diesel to the veins, slap you in the face coffee, not half-caf. CappaWork needs Full CAF too, but a slightly different kind.

 

Customers * AOV * Frequency = Revenue

Business can be simplified through analogy a number of ways. “It’s like an airplane” “A rocket ship!” “Hockey stick growth” “A well-oiled machine”

One of the most helpful analogies is a math problem. Incredibly, I only learned this a few months ago, not in business school.  

Customers * AOV * Frequency = Revenue.

“The number of customers you have” multiplied by “The average amount they buy” multiplied by “How often they buy” equals your total revenue. 

Huh?

Let's do some examples. Since we’re talking Christmas, we can start with trees.

Christmas tree farm:

100 customers buy one tree each for $60, once a year

100* $60 * 1 = $6,000 

If you wanted to increase revenue you could:

Customers: Buy more ads, Start a Tiky Toky or Instagram

Average Order Value: Sell hot chocolate, give sleigh rides, have a petting zoo

Frequency: Sell pumpkins at Halloween, easter egg hunt in spring

For the sake (I hope you like my Japanese joke) of example let’s say each option increased business by 10%.

 

	Customers		AOV		Frequency		Revenue
Base	100	X	60	X	1	=	$ 6,000
Customers by 10%	110	X	60	X	1	=	$ 6,600	Increase by 10%
AOV by 10%	100	X	66	X	1	=	$ 6,600	Increase by 10%
Frequency by 10%	100	X	60	X	1.1	=	$ 6,600	Increase by 10%
All by 10%	110	X	66	X	1.1	=	$ 7,986	Increase by 33%

 

If you work on one variable, you only increase total revenue by the increase of that variable. A 10% increase of customers but nothing else means a 10% revenue increase. But if you work on ALL THREE, you start to get the effect of multiplication!

(Note, we are not looking at the increase in cost, just the increase in revenue. Cost comes later)

One more example: 

Apple has 1,000 customers who buy an iPhone for $1,000 once a year.

If you wanted to increase revenue you could:

Customers: Advertise like crazy, make it so iMessage is awesome and customers recruit their family, get a network like Verizon to sell your phones

Average Order Value: Add a phone case, a charger, air pods, dumb dongles, Apple care, Apple Watch

Frequency: Release a new phone every 18 months, Apple TV subscription, Apple Music subscription, iCloud storage

Now each one of those options are great so let’s say it increases the variable by 35%

	Customers		AOV		Frequency		Revenue
Base	1000	X	$1,000	X	1	=	$ 1,000,000
Customers by 35%	1350	X	$1,000	X	1	=	$ 1,350,000	Increase by 35%
AOV by 35%	1000	X	$1,350	X	1	=	$ 1,350,000	Increase by 35%
Frequency by 35%	1000	X	$1,000	X	1.35	=	$ 1,350,000	Increase by 35%
All by 35%	1350	X	$1,350	X	1.35	=	$ 2,460,375	Increase by 246%

 

If you increase ALL THE VARIABLES by 35%, you can more than double the business!! Hot damn. You don't have to double the customers to double the business. Now we see why you have to pay for the headphones!

 

So, how do you apply this concept to CappaWork?

 

Last year was 1/3 CAF

Last year I focused only on increasing customers. I ran an Instagram account, worked with influencers, ran ads, worked on bulk orders. All my effort was around increasing total customer count. And because a small increase for just one variable means a small increase in total revenue it felt like my efforts were meaningless. An increase in customers by 10% doesn’t feed the ego and to be honest my ego (I should be able to do this, I’m a smart guy!?!) held me back. I stopped projects too early.

This year, I know the math. And I am going to leggo my ego. The only focus is on small increases in each area. Full CAF. The base numbers below are the real numbers from Planner sales in the last 12 months.

 

	Customers		AOV		Frequency		Revenue
Base	95	X	$ 60.2	X	1.15	=	$ 6,577
Customers by 30%	123.5	X	$ 60.2	X	1.15	=	$  8,550	Increase by 30%
AOV by 30%	95	X	$ 78.26	X	1.15	=	$  8,550	Increase by 30%
Frequency  by 30%	95	X	$ 60.2	X	1.495	=	$ 8,550	Increase by 30%
All by 30%	123.5	X	$ 78.26	X	1.495	=	$ 14,449	Increase by 220%

 

 

Rooted in Service 

Looking at this cynically it seems like the business is just trying to squeeze more cash out of the customer (like the dumb dongles). Perhaps, but let’s start with why CappaWork was founded.

I founded CappaWork to help ambitious Christians do the life-giving work that God has called them to, better and faster with less stress. To be able to close down that laptop and go love on their kids.

I launched the CappaWork Planner thinking the value would be obvious. So, I was quiet about its benefit and how it works.

But in being quiet, I missed a chance to serve. I missed a chance to help stressed out business owners get more done during the day so they can focus on their family at night. Dangit.

I’ve have had 12 years of experience working, an MBA and I’ve listened to far too many business books and podcasts on self-improvement. When I look at the CappaWork Planner I see something very different than someone who does not have this experience. Its utility does not need to be explained to me. What I failed to see is that everyone does not have the same experience. You can’t use a tool well if you haven’t been trained on it.

And, for the customers that used the Planner and found it useful, I’ve missed out on the chance to help them stay on the path! When one runs out, you have to go order another. When I have a long break between planners, I fall off the path. I stumble and tumble until I suddenly think “I need to start a new planner”.  

So as the leader of this business, I am both missing out on chances to serve my customers AND opportunities to increase revenue, so the company is more stable. Time to change that!

 

Going Full CAF 

What you will see in this next year are a few things. (Parentheses are how it ties to CAF)

1. Ads: More ads and ways to learn from CappaWork even if you don’t buy – like this blog. I let a lot of web traffic leak last year, lots of missed opportunities to serve folks. (Customers)
2. Free training: On how to use the planner, how to clarify your calling and how to set good goals. (Frequency – because people may be buying one planner but not using it, therefore not buying another)
3. Paid course: Deep dive on personal productivity and decision making in business as a Christian. The CappaWork Planner supports both things by helping you plan and prioritize, but there are other areas that can be further defined and lead to huge improvements in how stressful work feels. (AOV)
4. Subscriptions: This should just be a thing. Why do you need to enter your credit card again when your quarter ends? (Frequency)
5. Discounts on bulk orders: What if I want to give a bunch to my church? (AOV, Customers)
6. CappaWork Profit Accelerator: In the last year I really wanted to grow CappaWork, but all the services to help a small business grow are disconnected and no one helps with Full CAF. You can hire an ad agency, but they don’t help with AOV. You can hire a web developer, but they don’t help with copy. The profit accelerator will bundle Full CAF in a 13-week (familiar timeline anyone?) program for small businesses that are working to hit $100K per year in revenue. Once I prove I can grow CappaWork to that ARR, it’s time to help others too! It’s going to be a rad program, I can’t wait to get it going. (AOV)

I’m pumped to make this stuff for you and continue to help you skip the same mistakes I’ve made. The plan is clear, and I start a new quarter on Monday. Time for a new planner!!! Full CAF friends, full CAF.

Also, thanks to customer Nick Naudet for prompting a few of these ideas. If you have ideas on how CappaWork could better support you, send them to me!

Friends, you’ve got gifts to share and people to serve. I wish you peace, I wish you grace, I wish you quiet in the arms of a God whose crazy love knows no bounds and breaks through our shame. Rest in God’s glory this weekend and serve with joy on Monday.

 

Talk to you next week!

Much love,

-Nate