Fable
The troupe finally worked out how much gong-and-drum money it takes to host a table of new guests
A newly opened cloth shoe shop wanted to attract customers. The shopkeeper hired people to bang gongs, gave out coupons, set up a stage, and paid coppers to neighbors who introduced acquaintances. At month's end, the shop was indeed bustling, so he assumed business was good.
But the bookkeeper laid out the expenses: troupe fees, flyer paper costs, free shoe costs, staff overtime, and gifts to intermediaries—all recorded under customer acquisition. Divided by the number of people who actually bought shoes for the first time, each new customer cost quite a lot.
The shopkeeper wasn't convinced, saying many people had come in to look. The accountant reminded him: browsing isn't buying shoes, and a one-time buyer may not return. If the gross margin a new customer brings doesn't cover the cost of acquiring them, the busier it gets, the more you lose.
The shopkeeper first halved the drum and gong noise, thinking this would save money. As a result, fewer people entered the shop and fewer sales were made, while the cost per new customer actually rose. The first fix only cut expenses, without distinguishing which spending truly brought customers and which merely created a commotion.
So they tested separately: on East Street, fewer coupons and more existing customers bringing new ones; on West Street, no stage performances, only non-slip shoes displayed on rainy days; at the docks, dockworkers tried them on and were paid a thank-you gift per sale. Each path recorded its costs and new customers separately.
A few months later, the shopkeeper found that some channels had few customers but frequent repeat purchases, while some channels had many people but only took free gifts. The accountant looked at customer acquisition spending together with subsequent profit, and finally had a basis for deciding what could be scaled and what should be stopped.
The shop no longer asked only "how many people came," but "how much did each real new customer cost to acquire, and how much can be earned back later." Customer acquisition is not about making the loudest noise; only by calculating costs clearly can you know whether growth is burning money.
Later, when the shopkeeper heard "this street is crowded" again, he would first ask whether people would buy after gathering, whether they would return after buying once, and how much each new customer would cost. Drums and stages could still be used, but they shifted from bustle to assumptions in the accounts, and had to be verified. Later, when the shop expanded to the neighboring street, the shopkeeper first ran a one-week small test, calculated the cost per new customer, and only then decided whether to beat the big drum. Only after the numbers were clear could bustle possibly become growth. Otherwise, every time the bustle ended, the accountant could only clean up the losses again.