20VC: The Ultimate Hiring Playbook: Five Questions to Ask Every New Hire | What Makes Truly Great Leaders and How They Give Feedback | Do VCs Really Add Value; Lessons from Hard Fundraises with Matteo Franceschetti, Co-Founder @ Eight Sleep
The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
Setting a Cap for Customer Acquisition Cost
Setting a cap for customer acquisition cost involves blending and establishing a hard number based on top companies' marketing budgets and desired net margins. This approach forces the marketing team to optimize channels at the set CAC. Marketing teams may struggle initially due to a mindset focused on free cash and brand marketing without considering profitability from day one. Executive resistance is common, especially if they are accustomed to high spending. However, it is crucial to build a profitable business from the start to sustain long-term growth by unlocking efficient channels and focusing on testing different ads across platforms to significantly reduce CAC. By implementing this structure, businesses can achieve significant reductions in CAC and achieve sustainable growth over successive years.
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