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.
SaaS
SaaS metrics are precise. The assumptions underneath them are not.
Market context
Market context
SaaS businesses run on CAC, payback, net revenue retention and LTV. Each is measured precisely and each rests on assumptions about churn, expansion and attribution.
Commercial pressures
- 01LTV built on assumed rather than observed churn.
- 02Sales and marketing costs rising faster than new ARR.
- 03Discounting to close deals that weakens expansion.
Customer economics questions
The questions leadership should be able to answer.
Q1
What is payback on gross profit by segment and channel?
Q2
Is net revenue retention driven by expansion or price increases?
Q3
Which acquisition motions produce customers who expand?
Relevant capabilities
Where the work usually starts.
- 01Customer EconomicsUnderstand the quality and economics of the customers generating growth.Explore capability
Customer · Contribution · Repeat
- 04Marketing & SalesConnect acquisition and selling activity to actual customer economics.Explore capability
Demand · Customer · Transaction
- 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 ratio that read 3 to 1
Illustrative pattern. A board approves growth spend on a 3:1 LTV:CAC ratio. Observed churn puts the ratio closer to 1.2:1, and changes which segments deserve investment.
Also in Digital & Technology
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.
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.
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