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.
Market context
Market context
Luxury and premium businesses depend on scarcity, price integrity and desire. Growth that erodes any of them can raise revenue this year while reducing the brand's ability to hold price in the next.
Commercial pressures
- 01Outlet, discount and grey-market channels diluting price integrity.
- 02Inventory decisions that force markdowns.
- 03Clienteling investment without a view of client value.
Customer economics questions
The questions leadership should be able to answer.
Q1
How much of revenue is sold at full price, and what is the trend?
Q2
Which clients create long-term value, and how are they served?
Q3
Where is distribution breadth weakening pricing power?
Relevant capabilities
Where the work usually starts.
- 05Customer & Brand StrategyUnderstand how customer experience, preference and brand influence commercial value.Explore capability
Repeat · Future demand
- 03Revenue & PricingImprove revenue quality and capture more of the value being created.Explore capability
Transaction · Contribution
- 01Customer EconomicsUnderstand the quality and economics of the customers generating growth.Explore capability
Customer · Contribution · Repeat
Illustrative commercial problem
Illustrative · Not a client example
Reaching more customers, at a cost to the brand
Illustrative pattern. A premium label adds outlet and marketplace distribution to reach new customers. Volume rises while full-price sell-through in core stores declines.
Also in Consumer & Retail
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