01 · Recognize
Growth
Where should growth come from?
You are in this case when
- The objective is a revenue or customer target, not a margin.
- The client wants options ranked, not one diagnosis.
02 · Structure
Which drivers matter?
- 01
Core business
More from todayCustomers, purchase frequency, retention, price and mix.
- 02
New opportunities
Products × marketsNew products, segments, channels or geographies; test cannibalization.
- 03
Prioritize
Value × feasibilityCompare incremental profit, capital, timing and risk.
Revenue = customers × purchases per customer × average purchase value
03 · Solve
Work the scratch sheet.
Illustrative practice scenarioA subscription business has 1,000 customers paying $100 a month. A campaign adds 100 customers at a one-time acquisition cost of $300 each; contribution margin is 60%.
- Monthly contribution added100 × $100 × 60% = $6,000 a month
- Acquisition spend100 × $300 = $30,000
- Simple payback$30,000 ÷ $6,000 = 5 months
Payback is five months if the new customers stay and contribution holds. Test retention and extra service cost before scaling the campaign.
Work backward from an answer
If the answer is “acquire more customers”, the customers must stay long enough to pay back what they cost. So ask about retention before asking about the campaign budget.
04 · Recommend
Make the call in three buckets.
Scale the acquisition campaign, with a retention gate.
Payback is five months at a 60% contribution margin; the core is where growth is cheapest.
Track the cohort’s month-three retention before the next spend. Risk: service costs rise with volume and the margin slips.
“I would compare growth in the core with adjacencies, then rank options by incremental profit and execution risk.”
Watch for: Revenue growth is not value creation. Discounts, acquisition costs and working capital can absorb the upside.
Special sauce
Bring a real company into the room.
Should a new title stay exclusive or be licensed elsewhere? Compare incremental retained subscriber contribution and ad contribution with the licensing contribution forgone.
Read the story →growth · Diversified businessesBerkshire HathawayWould you accept faster premium growth if underwriting losses also rise? Calculate the cost of the additional float before counting the investment income it could earn.
Read the story →Three terms to use
- CAC
- Customer acquisition cost: attributable spend divided by customers acquired.
- Churn
- The share of customers or revenue lost over a stated period; say which.
- Cannibalization
- New sales that replace sales you would have made anyway.
Original Harper practice examples; every figure is illustrative. Adapt the questions to the client’s objective, timing and constraints.