The Hidden Cost of Acquisition-Led Growth 🧠

Hi there,

We’re having some building work done at home. A simple “box” extension.

What's struck me is how much of the work has gone into the foundations. We’ll never see them again, but they’re what holds everything else up.

Our builder said: "This is the bit that matters most, Peter. Get this wrong, and the rest doesn’t stand a chance."

It’s the same with growth.

Your earliest customers; the ones who stuck around through the wobble, the ones still quietly hiring your product to do a job that matters, are the foundations your future targets rest on.

Skip them or skimp on them, and the whole thing starts to creak as soon as you try to build anything big on top.

Customer retention isn’t a nice‑to‑have. It’s the groundwork for everything else.

Example: Growth Maths in Action

Imagine a marketplace platform where most revenue comes from one‑off transactions.

What if we stretch the retention goal to 30 % customer retention?

Current – 20% customer retention

• Returning revenue: $1m

• New revenue required: $4m

• Avg. revenue per new customer: ~$500

• New customers required: ≈ 8,000

Stretch – 30% customer retention

• Returning revenue: $1.5m

• New revenue required: $3.5m

• Avg. revenue per new customer: ~$500

• New customers required: ≈ 7,000

That’s 1,000 fewer people to acquire, support, and convert. Same top-line goal, less pressure, better efficiency.

Every extra point of retention is one point of churn you don’t have to plug with expensive acquisition.

_{† For simplicity, this model uses last year’s returning‑revenue base and excludes retention from this year’s new cohort.}

Start with the Job to Be Done

One of the most powerful ways to improve retention is by focusing on the job your product is being hired to do. Not your features. Not your positioning. The outcome the customer wants.

But delivering the job isn’t enough. You have to deliver it fast. 

Time-to-value matters. I’ve seen it across multiple teams. Early churn often happens, not because the product didn’t work, but because the value came too late …

✅ A quick Retention Audit

Customers don’t stay or come back just because they were satisfied. They come back because a real job got done, and they remember you for it.

1. What’s the real job retained users say you do best?
   Example: Are they hiring you for efficiency, confidence, or peace of mind? Interviewing a few long-time users can surface this fast.

2. How long does it take a new customer to experience that job?
   Example: Map your time-to-value. Is it days, weeks, or clicks? Track when your most successful customers say “this is working.”

3. What’s the simplest way to shorten that time-to-value?
   Example: Could you surface a key feature earlier, rewrite onboarding flows, or build in a prompt from customer success?

Rethinking the Revenue Equation

If your revenue model leans hard on acquisition, even a modest lift in retention can ease the pressure on the funnel. You can still chase bold targets; you just don’t have to run quite so hard to reach them.

Retention lets you grow with confidence. It builds resilience into the business model.

The real Growth Multiplier

The best part? When you highlight and reinforce the value for existing customers, they’re far more likely to recommend your product to friends, colleagues, and their wider network; creating organic growth loops in the process.

That’s not just sustainable growth. It’s growth built to last.

Speak soon,

Peter

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P.S. If you’re thinking seriously about how retention links back to proposition clarity and customer value, our Value Proposition Design Sprint is built for exactly that. It helps you surface what’s really driving loyalty, and where to double down. Check it out.