I posed the following question on Twitter a few weeks ago:
Let’s say that, in 2022, you drove $5M in new customer revenue and you brought in $900K contribution margin from those orders.
You find out that you LOST money on a third of those orders.
What are your next steps?
Almost half of the folks who answered the poll would try to fix the unprofitable customers, while slightly more than a fourth would scale harder (i.e. increase ad budgets).
So what’s the right answer? There isn’t one. It depends on what you’re trying to accomplish. But I want to take a minute to talk through the nuances of this question, because they hold the key to developing the KPIs you need to manage your business.
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