Prioritize Real Value And Business Success Will Follow
Forbes Finance Council
CEO and co-founder of Sunbit, a technology company making the buying and selling experience stress-free for everyone, everywhere.
There are a couple of schools of thought when it comes to business success. For nearly two decades, growth was a rallying cry for investors, executives and the financial market: Take the money, hire fast, scale up and win. More recently, as the tenor of the market has shifted, we’re hearing more about profitability as the only measure of success—and that companies should embark on cost-cutting, head count-reducing binges.
Which approach is right?
Neither.
One of the best pieces of advice I’ve heard given to people eager for a promotion is to focus on doing the right things. I think the same applies to companies.
It Comes Down To Helping People
Putting customers first sounds cliche. But adding value—identifying a real need and offering a better solution than what is already out there—is not only critical but, in my experience, significantly increases your chances of success.
There are always switching costs, so any new entrant needs to offer a recognizable and visible improvement over the status quo. This is where technology can play a pivotal role. When you have a new business or market, you can reimagine everything from product design to delivery and support.
You need a company that serves customers so well that it feels like a relationship. This business-customer relationship is symbiotic. You invest in them with your time and resources, trust their ability and commitment to repay or purchase, and they, in turn, trust you with their money and choices. This virtuous cycle of trust culminates in a win-win situation, where the company grows as customers see better outcomes.
The opposite is also true.
If your customers don’t see value over time, they will leave. Giving them an incredible product won’t be enough. Because the relationship is transactional, you’re likely to be displaced by the next best offer.
And, depending on the climate, new customers might be hard to come by because of rising rates, increased competition, or declines in buzz or word of mouth.
The Metric That Matters: LTV/CAC
Maintaining a strong LTV/CAC (lifetime value to customer acquisition cost) ratio is one of the top predictors of your business’s success. Consistently achieving a favorable balance means you’re providing genuine value that customers are willing to pay for, regardless of economic conditions.
Losing focus on this metric can quickly widen your gap to profitability, particularly when external factors such as rising interest rates or increased competition make customer acquisition costlier and retention more challenging. When this happens, your business risks stalling growth and shrinking margins, which could cause investors to lose confidence.
When you are clear-eyed about the value you offer, it is easier to have a clear vision of what needs to happen to achieve sustainable growth and profitability—all in service to your customers.
And, if you don’t truly believe in your value, it isn’t too late. Look for ways to make your products and services more accessible or shift your relationships to become more transparent and fair. Over time, your company will not only become more appealing but will also be better equipped to stand the test of time.
A real-world example: Charging fees in fintech has always been commonplace, but now it is standard. But at Sunbit, we committed to never charging our customers fees, and despite all of the extra pressure in the market and the attractive financial implications, we won’t do it. We believe in doing what’s right even when no one’s looking: Customers might not notice, and the market may be indifferent, but to us, it matters. We value our commitments and our customers, and value is the lifeblood of our company. The relationships we build today are the same ones that will sustain us going forward.
Mission And Values Help Weather The Storms
Like all business leaders, I know how fickle the winds of fortune can be.
In 2020, our financial runway was dwindling, with only a few months of cash reserves left. We openly communicated the situation to our employees and implemented salary cuts across the board, with management taking the most significant reduction.
By the end of 2021, however, we had successfully raised $210 million in total, including a $130 million Series D that spring, and achieved important milestones. In 2022, when SPAC listings were extremely popular, our company received multiple offers to go public. While the immediate financial gain was tempting, I knew we weren’t ready for that step. Jumping in would have meant risking the stability of our business.
Because I believe in the value we offer, and because our investors, employees, customers and partners do, too, I had a greater responsibility to our stakeholders. An exit was never the end goal. Of course, our wallets would have been fatter, but our business would have collapsed, and consumers would have lost out.
Market conditions shifted: Interest rates rose, consumer spending declined and investment capital became scarce.
But amid all these changes, internally, our core values and objectives remained the same.
Success Comes When You Give More Than You Take
I recently read that “a reset almost always favors the strong.” I firmly believe that. But, I think “the strong” are often misconstrued. It isn’t how fast you run but how far you can go. Those who combine product innovation, customer-centric culture and the right unit economics will thrive over the long run.
Growth and profitability are a means to an end—adding value in a way that enriches your customers’ lives. If you focus on the principles above, with the right business fundamentals, your company can become sustainable and grow with a clear path to profitability.
So, do the hard things. Do the right things. Be a company that creates real value for your customers; success will follow.
