Shikha Agarwal, VP of Consumer Marketing at Yelp, helps consumer brands achieve long-term growth through disciplined strategy and innovation
Taking over the growth marketing team at a global subscription streaming service, I inherited a budget and a problem that could sink it.
Our finance team had just announced a new rule: Every marketing investment had to deliver an ROI above a strict threshold. At first glance, it sounded reasonable. But as I dug into our numbers, I realized the way we were justifying spend would not pass the new test. We were relying on global averages and a simple calculation: average cost per signup compared to the average one-year margin.
The problem? Costs varied dramatically across countries, platforms and subscription plans. Many of the signups we counted were free trialers who never converted to paid. And several subscribers stayed for less than a year, while others stayed much longer. By masking these differences in averages, we were ignoring where the economics actually broke down. If we kept investing this way, we risked losing our budget and the performance efficiency we needed to grow.
That is when I developed what became our Growth ROI Framework.
The Problem With Budgeting By Blunt Instruments
Most marketing teams still anchor on channel-level CPAs, attributed conversions or top-line ROAS. These metrics are familiar but flawed:
• They fail to account for retention and downstream margin.
• They do not measure true incrementality.
• They can lead to overinvestment in inflated channels.
The result is inefficient spend, overstated performance and missed opportunities to double down where value truly lives.
Building A Smarter Investment Model
The Growth ROI Framework evaluates every opportunity with a unified, composite ROI formula: ROI = (LTV – CPIA) / CPIA.
Where:
• CPIA (cost per incremental acquisition) reflects the true cost of acquiring a new paid subscriber, adjusted using lift tests, pre/post studies or media mix models
• LTV (lifetime value) is modeled using paid member months × contribution margin, segmented by SKU, platform, market and user type
This approach creates an apples-to-apples comparison across very different marketing channels, surfaces and campaigns, allowing leaders to prioritize what delivers maximum profitable growth.
Why Granularity Matters
In that first audit, drilling into LTV at a granular level was critical. Margins varied significantly between iOS, Android and web. Annual plans behaved differently from monthly plans. Certain geographies had high acquisition volume but low retention, pulling down profitability.
By calculating CPIA and LTV at the channel × market × SKU × user type level, then refreshing those inputs quarterly, we created a model that reflected business reality, not a misleading average.
Strategic Overrides: Balancing ROI With Long-Term Value
While the framework enforced a strict ROI threshold, we also built in the ability to make strategic overrides. These were rare, documented cases where the long-term value was not fully captured in short-term ROI, such as entering a new market, investing in brand awareness or running an experiment to build a future growth lever.
From Planning To In-Quarter Optimization
The framework quickly became our single source of truth:
1. Annual And Quarterly Planning: Guided budget allocation across regions, SKUs and channels based on modeled return.
2. In-Quarter Adjustments: Allowed us to redirect budget toward outperforming initiatives or away from underperforming ones in real time.
Real-World Impact
Once we began using the Growth ROI Framework for paid media, it became clear that it could guide any growth investment. We applied it to compare the ROI of different incentive structures such as “three months free” for new users, “give $10, get $10” referrals and one-month discounts for winbacks.
On one occasion, by rigorously testing and calculating the incremental ROI of each variant of a new user discount, we landed on the winning variant: a fixed dollar amount off three months. This outperformed other offers in both conversion and retention, and we made it our standard landing page offer for all new users. It became one of the highest-impact growth initiatives we ever launched.
A Strategic Imperative In 2025
As privacy regulations and platform changes shrink data visibility, incrementality-based models like this are no longer optional. Attribution alone is unreliable. Leaders who embed CPIA and LTV into their budgeting process can justify spend to finance teams, navigate resource constraints and drive incremental growth while being financially prudent.
The Growth ROI Framework did not just save our budget that year; it became a shared language between marketing, finance and product. It turned performance metrics into capital allocation decisions and created a repeatable, defensible system for growth.
Keep these key takeaways in mind while implementing your own growth investments:
• Dig deeper than averages. Break down cost and value by market, channel, platform and user type so you can see where the real ROI is hiding.
• Measure true incrementality. Use lift tests or media mix models to understand net-new growth vs. users you would have gained anyway.
• Set a clear ROI hurdle rate. Make sure every investment clears it unless there’s a strategic reason to override.
• Revisit the numbers regularly. Refresh your CPIA and LTV inputs quarterly so your decisions match current realities.
• Use one model for all investments. Apply the same ROI logic to ads, offers, partnerships and incentives so you can compare them on equal footing.
Final Thought
That first year taught me that marketing is not just about spending wisely; it is about investing wisely. The strongest growth teams today do not just generate results; they engineer them. And the smartest investment you can make is not in a single channel or campaign, but in a framework that ties every dollar to long-term value.
Forbes Business Development Council is an invitation-only community for sales and biz dev executives. Do I qualify?