How to boost growth? How to acquire more customers? How to get more traction? If you are a founder looking for answers to these questions, do not directly jump to analysing options to further fill the top of the conversion funnel. Optimise your conversion funnel first. Optimising the conversion funnel will not only lead to more customers, but also to lower customer acquisition costs, shorter payback periods, better CLV/CAC-ratios and ultimately higher growth.
While there seems to be a common understanding on how to calculate most KPIs, I see some inconsistent approaches as to calculating unit economics for platform businesses. This heterogeneity leads to confusion and unnecessary time spent discussing what the correct approach is. With this article, my co-author Richard Meyer-Forsting and I want to share some of our insights we gathered over the years and explain how we believe unit economics for a platform business need to be calculated.