Customer EconomicsObservation 0022 min read
−14.6%
Growth is not the same thing as value.
A business can get bigger and weaker at the same time. The gap shows up first in the customers, not in the P&L.
Consumer & Retail
Consumer demand is volatile. The economics behind it should not be a surprise.
Market context
Market context
Consumer and retail businesses win or lose on the quality of demand they buy, the price they hold, and whether customers come back without being paid to. Channels multiply, promotions deepen, and margin is decided long after the sale is booked.
Commercial pressures
- 01Rising acquisition costs across paid channels and marketplaces.
- 02Promotion calendars that train customers to wait for the offer.
- 03Returns, fulfilment and service costs landing after revenue is counted.
- 04Retail partners and marketplaces taking a growing share of margin.
Customer economics questions
The questions leadership should be able to answer.
Q1
Which customers and channels create contribution after returns and fulfilment?
Q2
What does each promotion need to deliver, and does it?
Q3
Is repeat purchase earned, or bought with discounts?
Q4
Where is the business trading future pricing power for this quarter's volume?
Relevant capabilities
Where the work usually starts.
- 01Customer EconomicsUnderstand the quality and economics of the customers generating growth.Explore capability
Customer · Contribution · Repeat
- 03Revenue & PricingImprove revenue quality and capture more of the value being created.Explore capability
Transaction · Contribution
- 04Marketing & SalesConnect acquisition and selling activity to actual customer economics.Explore capability
Demand · Customer · Transaction
Illustrative commercial problem
Illustrative · Not a client example
The peak that grew revenue and shrank the business
Illustrative pattern. A consumer brand runs its deepest promotion to hit a Q4 revenue target. Orders rise, the target is met, and January shows the new cohort buying only on discount, returning more, and contributing less than the customers it replaced.
Industries in Consumer & Retail
Intelligence
Related thinking.
Marketing & SalesObservation 0032 min read
−8.2%
The cheapest acquisition is not automatically the best acquisition.
Optimizing for cost per acquisition finds the customers who are cheapest to reach, not the ones worth reaching.
Customer EconomicsObservation 0042 min read
1.2 : 1
The ratio that reads 3 to 1, and isn't.
An LTV:CAC ratio is only as good as the churn behind it. Replace assumed churn with observed churn and the green light can turn red.
A TCB engagement
10–15
Business days
Customer Economics Sprint
One commercial diagnosis and a clear 90-day path forward: the constraint identified, the economics diagnosed, the opportunity benchmarked and the intervention prioritized.
Bring the constraint.We'll give it direction.
Start with the commercial problem you're trying to solve. We'll identify the constraint, diagnose the economics, and determine whether there is a useful next step.
- 01Identify the constraint
- 02Diagnose the economics
- 03Recommend the right intervention
- 04Define the next move