Blended CAC is £300. The next customer costs £1,000.

Growth plans are costed using the average customer. Growth is delivered by the marginal one, and the two numbers diverge in a predictable direction.

By Steve 5 min read
Abstract bridge artwork for Blended CAC is £300. The next customer costs £1,000.

A growth plan almost always contains a division. Revenue target, minus what the existing base will deliver, equals new customers required. Multiply by acquisition cost, and you have the budget. The arithmetic is sound. The input usually is not, because the acquisition cost being used is an average of everything that happened last year, and what happens next year is not an average: it is an increment. This is one of the few errors in commercial planning that is systematically biased in one direction. It does not scatter around the…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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