The Distribution Spectrum

• The effectiveness of any distribution channel is governed by the balance between two key metrics: Customer Lifetime Value (CLV) and Customer Acquisition Cost (CAC). A channel is viable only if CLV is significantly higher than CAC.
• The higher the product's price (and thus its CLV), the more you can and should spend to acquire a customer.
• Distribution methods exist on a spectrum based on deal size:
  • Complex Sales: For very high-priced products (e.g., >$1M). Involves long sales cycles and personal attention from top executives.
  • Personal Sales: For mid-priced products (e.g., $10k-$100k). Requires building a scalable process for a dedicated sales team.
  • The Distribution Dead Zone: A difficult area for products priced around $1,000, where personal sales are too costly and mass marketing is too inefficient. This is a hidden bottleneck for many businesses.
  • Marketing & Advertising: For low-priced, mass-appeal products. Works when CLV is too low for personal sales but high enough to fund broad ad campaigns.
  • Viral Marketing: The product's core functionality encourages users to invite others. Ideal for fast, exponential growth, especially when the viral loop is quick and frictionless.