The 4 Signals of Economically Scalable Demand

I keep coming back to the same four questions whenever I look at a consumer product:

CAC → Can you acquire users cheaply?
Retention → Do users actually keep coming back?
AOV → Do users spend enough each transaction?
LTV → Does the business make enough over the customer’s lifetime?

That’s it. Most of the noise around “demand” collapses into these.

Huge demand with terrible unit economics isn’t a great business. Low retention or weak LTV will eat you alive no matter how many installs you rack up. The reverse is also true — the companies that feel inevitable usually score well on all four at once.

Why a radar chart

People default to X–Y graphs for this kind of thing. I don’t love that here. These four signals aren’t two pairs competing for space — each one matters on its own, and each one pulls equal weight.

So I prefer a 4-axis radar (spider) chart.

One nuance on CAC: invert the axis. Closer to the center means higher CAC. Farther out means lower CAC. Lower CAC is better, so the “good” direction should match the other axes visually. Otherwise the chart lies to your eye.

How to read it

Winner — low CAC, high retention, high AOV, high LTV. The polygon is large and almost symmetric. Product works. Economics work. You can push.

Early product — CAC looks fine (curiosity drives installs), but retention and LTV are weak, AOV is maybe mid. The shape skews. Marketing is doing its job; the product hasn’t earned the right to keep people yet.

Not viable — high CAC, poor retention, low AOV, low LTV. Tiny blob near the center. Expensive to acquire, quick to leave, not much monetization. Hard to argue you’re looking at a business.

What each number is actually telling you

Every consumer product, stripped down, is these four numbers:

  • CAC tells you whether you can buy growth.
  • Retention tells you whether users actually care.
  • AOV tells you how much value users create today.
  • LTV tells you how much value they create over their lifetime.

You can win a week on one of them. You can even fake momentum for a quarter. But when all four move in the right direction at the same time — that’s when you’ve found a business, not just a product.