Growth Versus Margins: The Balancing Act Every CPG Brand Faces

Christopher Yang, Co-President of SHOPLINE.

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​As co-president of SHOPLINE, a global commerce platform, the job puts me in front of small and mid-sized CPG brands across the U.S. almost every week. I see the same tension at every stage of their growth: how much to invest in the customers they have, and how much to spend chasing the ones they don't.

A founder launches with a product they believe fills a gap. The first orders land, and the first retailer says yes. Then, the business matures, and the decisions get harder. Customer acquisition costs climb. Channels that once delivered predictable returns start demanding more spend for less. And then the question that defines this era of consumer products shows up: Keep investing in growth and watch margins erode, or pull back, protect what you've built and risk losing ground to competitors who didn't blink? You don't solve that trade-off by picking a side. You solve it by building a system where retention, lifetime value and channel architecture feed each other.

Investing In Retention And Funding Growth

McKinsey researchers warn against what they call the "acquisition trap": Companies that chase new customers while underinvesting in retention struggle to grow sustainably. The brands producing the strongest results right now have flipped that equation. Instead of treating retention as a defensive line item, they treat it as the source of capital that funds new customer acquisition. The principle isn't new. Decades-old Bain research, popularized in Harvard Business Review, established this dynamic long before AI made the math harder to ignore.

What I'm watching across the CPG accelerator programs we work with confirms this at scale. The founders scaling fastest fix the obvious leaks first: improving onboarding, addressing the moments where customers normally churn and giving existing buyers a reason to come back one more time. That work alone frees up the margin to fund the next phase of retail expansion or product launches without asking finance for a bigger budget.

Retention is what makes growth sustainable. It's where the math actually works.

Building Around Lifetime Value As An Operating Philosophy

Most consumer brands track lifetime value on a dashboard. The best brands engineer their entire operation around it. Product development, post-purchase experience, subscription models and customer service all serve one job: extending the relationship past the next transaction. A customer who buys from you four times over two years is worth far more than four customers who each buy once, because you never paid to acquire the repeats.

Look at Hims & Hers. By the end of 2025, they had more than 2.5 million subscribers, with most on personalized formulations the company built specifically to deepen the relationship and improve retention. Their Hers brand alone is on pace for over $1 billion in 2026 revenue. The product roadmap exists to keep existing subscribers in the system longer.

I see this play out in every cohort I'm in front of. The brands that compound have teams that can answer one question without checking a spreadsheet: What's our average customer worth, and what specifically are we doing today to make that number bigger?

Blending Channels Instead Of Betting On One

Most operators in CPG still treat the channel decision as binary: Are you a retail brand or a direct-to-consumer brand? That framing is costing them margin every quarter they hold onto it.

Consider e.l.f. Beauty. The company was founded in 2004 with a radical premise: Sell cosmetics starting at $1, online-first. Over the next two decades, they expanded into Target, Walmart and Ulta Beauty, and today they're the top mass cosmetics brand in the U.S. by unit share. e.l.f. has grown net sales and market share for 28 consecutive quarters, crossed $1.3 billion in fiscal 2025 revenue and posted a 23% compound annual growth rate over the past decade in a beauty category that grew just 4%.

Retail shelves at Target and Walmart drive discovery and trial. Customers who find the brand in-store move into the direct channel, where loyalty programs, email and repeat-purchase data deepen the relationship. Retail brings customers in. Direct keeps them coming back. The data between them is what protects the margin.

The Bottom Line

Seven years ago, I wrote a piece for Forbes about how AI was starting to help project teams move faster on better information—coordinating work, forecasting outcomes and flagging risks before they showed up in the numbers. I saw the direction. I didn't see how fast it would arrive.

Today, AI runs through every function in a CPG business, and the best operators have gotten good at the same discipline I wrote about then: separating signal from noise. The deepest signal is the relationship between growth and margin. The technology around it changes, but the signal doesn't.​

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