Blended CAC is £890. The next customer costs £2,400.

Growth plans are usually built by multiplying next year's customer target by last year's average acquisition cost. The arithmetic is where the trouble starts.

By Steve 5 min read
Abstract bridge artwork for Blended CAC is £890. The next customer costs £2,400.

A growth plan almost always contains one line of arithmetic that nobody argues with: the target number of new customers, multiplied by the average cost of acquiring one. It produces a marketing budget that looks defensible because it is grounded in actual historic performance. And it is very often wrong by a factor approaching two. The reason is that average cost and marginal cost are different quantities, and acquisition is one of the areas of a business where they diverge fastest. The average tells you what the last hundred customers…

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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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