GrowthObservation 0012 min read
4
Revenue is evidence, not an explanation.
A rising line proves something happened. It says nothing about why, whether it was worth it, or whether it will happen again.
Retail
Retail margin is decided by mix, markdown and the customer who comes back.
Market context
Market context
Retailers manage thousands of prices, a promotional calendar and a store and online estate at once. Contribution depends on mix, markdown depth, cost-to-serve by channel and the loyalty of core customers.
Commercial pressures
- 01Markdown and promotion depth rising season on season.
- 02Online growth with a higher cost-to-serve than stores.
- 03Loyalty programs rewarding behavior that would have happened anyway.
Customer economics questions
The questions leadership should be able to answer.
Q1
What is contribution by channel after fulfilment and returns?
Q2
Which promotions create incremental baskets?
Q3
Which loyalty mechanics change customer behavior?
Relevant capabilities
Where the work usually starts.
- 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
- 06Growth IntelligenceGive leadership the intelligence required to make better commercial decisions.Explore capability
The full chain
Illustrative commercial problem
Illustrative · Not a client example
The loyalty program that paid for existing habits
Illustrative pattern. A retailer's loyalty scheme shows members spending more than non-members. Most of that gap existed before they joined, so the program is rewarding, not changing, behavior.
Also in Consumer & Retail
Intelligence
Related thinking.
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.
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