Don’t look at the wrong Score Card to define Growth

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.

2016-03-06T15:47:47+00:00September 13th, 2015|Categories: Startups|4 Comments

4 Comments

  1. Syef shahzaman shah September 15, 2015 at 4:24 pm

    Great equation of success 🙂 for every startup

  2. Sheikh September 15, 2015 at 8:12 pm

    Love this. A simple but effective strategy to stay focused on growth and see the reality of your business!

  3. Sheikh September 15, 2015 at 8:14 pm

    Love this post. It is a simple yet effective formula to see the realities of your business. The beauty in simplicity is also SPEED. If we want to grow fast we must make decisions fast and not get lost in data!

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