You might be spending too much on paid acquisition
jon4growth.substack.com
When you’re scaling a paid acquisition channel you should constantly question whether you’re spending in the most efficient way possible? If you’re scaling your spend across various channels, it’s more than likely that you’re facing rising costs. But how do you know where and when to draw the line?
The more useful and much much important metric to understand is marginal contribution and your marginal CAC.
In the illustration you roughly have a $90 CAC for 0-10k and 10k-20k in spend. However the CAC average change to $100 which means for the spend of 20k-30k you paid $110 for those conversations. You then have to understand the business unit economics to ensure that on that marginal acquisition is profitable ( keeping in mind we are past the growth at all costs days and capital is expensive).
The more useful and much much important metric to understand is marginal contribution and your marginal CAC.
In the illustration you roughly have a $90 CAC for 0-10k and 10k-20k in spend. However the CAC average change to $100 which means for the spend of 20k-30k you paid $110 for those conversations. You then have to understand the business unit economics to ensure that on that marginal acquisition is profitable ( keeping in mind we are past the growth at all costs days and capital is expensive).