It is easy to be trapped into the illusion of growth by looking at the wrong score card. Growing burn rate doesn’t correlate to customers. While spending money is easy, getting it is far difficult.

Here is a simple formula to calculate growth

CCA – Cost of customer acquisition = X

LTV – Life time value of customer = Y

COG – Cost of delivering value to customer over Y period = Z*

Here are the two goals to achieve growth

#1 Make this happen   Y > X + Z

#2 Increase the delta in above equation, either by increasing the LTV or decreasing the CCA and/or COG. 

If #2 is increasing then you are growing, if not then you are throwing away the money

*For simplicity and understanding X, Y & Z are considered constant here while in real life they are not.

55