How can I model the sticky growth engine?

  1. First, make sure you are modeling your sales using “customer acquisition.” To do this, select assumptions/revenues/sales models in the menu. If the top of your screen does not read “Sales Model » Customers by Marketing and Sales Effort,” press the blue “Select a New Sales Model” button at the bottom of the screen and then select “BU 3: Use Marketing and Sales to Drive New Customer Acquisition.”
  2. In the sticky growth engine, emphasis is on retaining customers, enhancing the user experience, and driving up the lifetime customer value. Therefore, you should set the assumptions on this page as follows. In general, to focus on a sticky model of growth:
  • Expense Item or Employee Type: Any

  • Customer Acquisition Cost (CAC): Usually can afford to be relatively high because you expect to derive a lot of benefit from each customer.

  • Sales Cycle: Obviously the shorter the better, but like CAC, you might be able to survive with a longer cycle.

  • Average Order Size (AOS): This is the secret of your success. This needs to be high. Of course, the customer lifetime value will be a combination of this and profit margin.

  • Periodicity: Most likely monthly.

  • Retention Rate: This is also likely to be a secret of your success. Higher the better.

  • Viral Coefficient: Not critical for your business. Could be zero.

  • Viral Cycle Length: N/A

Related Questions:

What is a sustainable growth engine?

How do I change the customer retention rate? How do I change the customer attrition rate?

How do I change customer acquisition cost (CAC)?

How do I change the length of the sales cycle?

How do I change the periodicity? How do I change how often customers purchase?

How do I change average order size (AOS)?

How do I change the product mix? How do I change the products that customers purchase?

How do I choose prices?

How can I model the viral growth engine?

How can I model the paid growth engine?


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