How is the competitor actually buying growth?

How is the competitor actually buying growth?

Growth is purchased whenever current resources are exchanged for future customers: advertising, discounts, sales capacity, channel incentives, implementation, free service, financing terms or acquisitions. The strategic issue is not whether spending is involved, but whether the acquired relationship returns more durable contribution than it consumes.

Reconstruct fully loaded acquisition cost by cohort and channel. Include sales compensation, partner share, onboarding, promotions, bad debt and the product or service capacity dedicated before revenue stabilises. Reported marketing expense alone misses costs embedded in gross margin, capitalised implementation or another segment.

Pair cost with gross-margin retention, expansion, churn and payback. Use mature cohorts and sensitivity ranges rather than a lifetime value based on unobserved years. Separate customers who would have arrived organically and identify whether incentives pull demand forward. Fast payback with weak retention is not the same asset as slower acquisition with durable expansion.

Watch the marginal curve. A channel can look attractive at small scale and deteriorate as auction prices rise, high-intent audiences saturate or sales territories weaken. Compare incremental acquisition spend with incremental contribution, working capital and support load. Test whether slowing expenditure would reveal underlying demand or simply end growth.

Finally, assess strategic residue: brand, distribution, data, installed base or switching cost that remains after the campaign. Buying growth can be rational when it builds a compounding asset and funding is resilient. It becomes fragile when each new revenue unit requires more subsidy while retention and economics fail to improve.