3 steps to reduce CAC for your SaaS
3 steps to reduce CAC for your SaaS
Episode 58
Hello friends, welcome to GrowthShot #58. Today’s theme is:
The 3 steps to reduce your SaaS CAC- all in less than 250 words
Let’s dive in
Brought to you by:
Friends,
CAC is customer acquisition & is measured via a simple formula.
CAC = ($$$ spent in marketing & sales + labor)/number of customers acquired. Over time period “t”.
Your $$ spent in marketing/sales is directly proportional to your CAC. And the number of customers you acquire is inversely proportional to the CAC.
The more customers you acquire at a constant $$$ marketing/sales spend, the lower your CAC gets. So how do you get more customers at the same $$$ spend?
A good rule of thumb is to recover your CAC in 12 months.
Step 1: Quantify your customer persona - Your pricing tier is probably split across 3 personas. And each tier’s CAC is different. Quantify and measure your LTV: CAC ratio for each of the tiers. Aim for a LTV:CAC ratio of 3:1.
Step 2: Identify customer-channel fit - Use data in Step 1 above to identify the relevant distribution channel corresponding to the persona. These can be both sales/marketing channels depending on your customer persona & whether your SaaS is high-touch or low-touch.
Step 3: Optimize your channel - Track, measure and optimize your acquisition channels across your personas. Set up KPIs and revisit them each quarter.
Download this GrowthShot
Hope you enjoyed your GrowthShot
There are few ways you can support this small, bootstrapped business:
Optimize your SaaS landing page to get more users - Optimize your landing page, pricing page and your email onboarding campaigns
Become a patron - Show your support by subscribing to GrowthShots for as little as $7/month