I'll call out four or five areas that each company should focus on in order to mitigate the risk of having high customer acquisition cost.
I think number one is just to set up the proper org structure.
Like reporting lines, roles and responsibilities of different individuals participating in the sales and the renewal process. Very often we're creating those so-called convenience roles. And after a while, you are ending up with multiple roles that are not necessarily acting in a cohesive way because everyone starts to see their own role differently.
So you have to be careful, you have to narrow this down to a few roles, and make sure that your organizational alignment is very clear and you avoid the kind of low span of control from the managerial point of view, right?
Like it's a small company, you can't inflate the number of managers and directors, as well, right?
So the roles were responsibility, responsibilities as a result of that. Will become a little bit more expanded, right? It, it's not a more narrow approach, it's a focused approach.
But I think you can expect from one role to do a little bit more in multiple areas, right? And for that reason, in each of these areas, you need to focus on key tasks.
I think talking about tasks, and that's another one you need to introduce the task automation and, and self-service model. In areas where this is possible, right?
If you have a lot of data about how the customers are asking you how to do X, Y, Z, or prospects asking you, definitely should have some sort of automation, right?
There's no reason why somebody wouldn't be able to set up by themselves, right? Or a free trial should be with minimal effort as well, right? All tasks in the end need to be somewhat analyzed and eventually automated.
The third one is a little bit more intangible, but I noticed from my experience that it helps you to build a more efficient organization over time.
And I know that people talk about diversity, but I'm more thinking about diversity of skillset that you bring into the organization. That's also a reflection of my background and how I evolve where I am today, starting somewhere in finance. You can benefit from variety of different experiences bringing into your new job.
The last one I will call out, which is a very common enemy, but it's often forgotten, is where you have individuals that are trying to design the process.
That is detached or is not well connected with how your prospects and customer think about the problem your product is trying to solve. You know, you have almost like a parallel world very often. This is what the customer and prospect is thinking, and then this is disjointed approach on the company side.
It's not reflecting on that, it's not trying to fit in because they think that's how the process should look like. These perceptions need to be aligned. And I think this, all of these things will help you to build the foundation for managing CAC.
Now, as for CAC itself and driving the actions, you need to understand how your spend is built behind this, right? There are different categories of spending. That each of the departments need to understand in detail, especially leaders in those departments, so that they can quickly react if something is not in line.
You know, your acquisition, your bookings are not coming in. And then you need to make sure that those ratios are actually working well with the other metrics. And LVT is obviously a golden standard to compare with CAC.
But doesn't mean that companies follow that. Sometimes it's justified to be below. If you think that in the long run, it's gonna give you the right return.
about the author
B2B SaaS operations leader experienced in driving GTM strategies in both startup and publicly traded companies. Specialized in creating necessary operational efficiencies through business analytics, budgetary, and capacity planning.