Kliuless #63: The Loyalty Economy

[KL: Recommend reading section titled "How to Value a Company by Analyzing Its Customers"]

"Using customer metrics to assess a firm’s underlying value [...] is called customer-based corporate valuation (CBCV). This approach is driving a meaningful shift away from the common but dangerous mindset of 'growth at all costs' toward revenue durability and unit economics—and bringing a much higher degree of precision, accountability, and diagnostic value to the new loyalty economy"

"The premise behind CBCV is simple. Most traditional financial-valuation methods require quarterly financial projections, most notably of revenue. Recognizing that every dollar of revenue comes from a customer who makes a purchase, CBCV exploits basic accounting principles to make revenue projections from the bottom up instead of from the top down. Although this may seem like a radical departure from traditional frameworks, that’s not the case: CBCV simply brings more focus to how individual customer behavior drives the top line"

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