Entrepreneurs sometimes chase customer numbers instead of customer economics. A more useful question is how much value each customer creates and how reliably the business can retain them.
Frequently Asked Questions
What makes a customer valuable?
Factors can include revenue, profit contribution, retention, growth potential and acquisition cost.
Is recurring revenue valuable?
Predictable recurring revenue can be attractive because it may make future cash flows easier to forecast.
Are more customers always better?
Not necessarily — a large customer base can still be unprofitable if customers cost too much to acquire or serve.