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 Services
Service businesses sell capacity and trust. Both have an economic value.
Market context
Market context
Hospitality, travel, wellness and subscription businesses sell time, capacity and experience. Their economics depend on utilization, on the price mix of what is sold, and on whether customers return and recommend.
Commercial pressures
- 01Distribution partners and aggregators taking a large share of each booking.
- 02Dynamic pricing that fills capacity but erodes rate integrity.
- 03Churn in subscription and membership models hidden by new sign-ups.
- 04Experience investment without a clear line to repeat and referral.
Customer economics questions
The questions leadership should be able to answer.
Q1
What does each channel cost per booking or member, after commission?
Q2
Where is price discounting filling capacity that would have sold anyway?
Q3
Which customers return and refer, and what brought them?
Q4
What is observed, rather than assumed, member lifetime?
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
- 05Customer & Brand StrategyUnderstand how customer experience, preference and brand influence commercial value.Explore capability
Repeat · Future demand
Illustrative commercial problem
Illustrative · Not a client example
Full, and less profitable
Illustrative pattern. A hospitality group lifts occupancy through online travel agencies and last-minute offers. Utilization looks excellent, while net rate after commission falls and direct, repeat bookings decline.
Industries in Consumer Services
Intelligence
Related thinking.
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.
PricingObservation 0062 min read
+75%
The discount that needs 75% more units.
Break-even volume on a promotion is almost always higher than the discount itself. At 30% off and a 70% margin, it is 75%.
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