CAC by Channel
In a marketing department, Customer Acquisition Cost (CAC) is crucial to understand, as it helps to determine how you allocate budget towards organic and inorganic lead generation channels. The primary way CMOs and other marketing leaders back into these decisions is by comparing CAC to Customer Lifetime Value (LTV). This comparison poses the question “How much would I spend to acquire a new customer given that customer’s ultimate value to my business?”
Using CAC benchmarks for each lead generation channel, you can determine a comfortable CAC-to-LTV ratio. It is generally healthy to shoot for 1:4, meaning you would pay $1 to make $4 in gross profit. This leaves enough room to factor in overhead costs, one-time costs, and a healthy margin of error before you’re in the territory of spending almost as much to acquire a customer as you’ll make from them.
CAC by Marketing Channel, Organic and Inorganic
The table below lists CACs by marketing channel, separating out organic and inorganic channels. These CACs represent a 3 year average, which typically includes a 4-6 month learning period where the CAC is much higher. The benchmarks below were achieved in high-performing campaigns carried out by experienced agencies.
|CAC by Channel|
|Marketing Channel||B2B CAC||B2C CAC|
|ORGANIC MARKETING CHANNELS|
|Thought Leadership SEO||$647||$298|
|Social Media Marketing||$658||$212|
|Industry Trade Shows||$1,390||$535|
|Average for All Organic Channels||$942||$480|
|INORGANIC MARKETING CHANNELS|
|PPC / SEM||$802||$290|
|Account Based Marketing (ABM)||$4,664||N/A|
|Average for All Inorganic Channels||$1907||$319|
For convenience, we have also placed the information from the table into two charts, one for organic and one for inorganic marketing channels.
Optimize CAC With An Experienced Marketing Partner
We hope you’ve found this report useful as you optimize your marketing decisions. Our agency has extensive experience lowering CAC through our thought leadership SEO service. To discuss a potential partnership, contact us here.
To learn more about CACs and LTVs, see our other reports:
Evan Bailyn is a bestselling author and award-winning speaker on the subjects of SEO and thought leadership. Contact Evan here.