Customer Economics
Observation 002
· 2 min read
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.
One number
−14.6%
illustrative 90-day value of new customers while revenue grew 18.4%
One mechanism
Growth measures volume. Value measures what that volume leaves behind after it has been acquired, served and retained.
One decision
Judge growth initiatives on contribution and 90-day value by cohort, alongside revenue.
Illustrative. Revenue is up 18.4%. Orders are up 24.1%. Acquisition is 8.2% cheaper. Every growth dashboard is green.
Underneath, the customers arriving now are worth 14.6% less at 90 days than the ones before them, and each order contributes 7.8% less after variable costs.
Nothing is wrong with the growth numbers. They are measuring volume, and volume went up. They are simply not measuring value.
The fix is not a new dashboard. It is to put one value measure next to every growth measure, so that 'up' has to mean 'better' before it gets more budget.
Evidence · Illustrative · Not client data