What do you do when customer acquisition costs keep going up more than your marketing budget?
When it’s already hard enough to hit the target (which isn’t going down, by the way) and your team might have shrunk too.
CAC rising more than marketing budgets is the double whammy from hell.
So what do you actually do then?
From what we’ve seen in recent months, most B2B marketing teams find themselves in one of these three response buckets:
- Try to do more
- Try to be more efficient
- Try to make a significant change
We’ll cover them all in detail, but let’s first establish the main reasons why this is happening across the board.
First of all, channels are saturated. Like, way saturated.
There’s also more competition everywhere – in every way.
And the deck is basically stacked against B2B marketers now.
How? Channels have moved the goalpost to make content discovery harder while doing everything they can to keep people in their channel.
So with that in mind, let’s get back to these three main buckets of response to the issue with CAC rising more than marketing budgets…
1. Try to do more
That old “more lever” was actually a viable one for years, but everybody’s doing more now, so how much more can you actually do?
Again, saturated channels and increased competition. And it’s not like you’ve been laying back not doing anything. At some point you just can’t do more. But many will still try. And flame out.
It’s synonymous with what we’ve previously referred to as the false struggle of marketing.
If we just run one more campaign, add one more email, fire up one more set of ads, create that one additional video, jump into one more channel, do that one extra event.
Just one more and we’ve somehow executed our way out of the problem. Ah, we wish!
2. Try to be more efficient
“Let’s just do more of what’s working and cut what’s not.” Right, that works – for about a minute.
You might actually be able to buy yourself a quarter or two. But then you hit the wall. Targets aren’t coming down, and you’ve likely cut off anything that resembles real distribution in an effort to make the dashboard look healthy in the near term.
It’s understandable that folks wanna try this route, and it doesn’t have to be a bad thing, but it’s not even remotely close to a sustainable approach to driving the growth your business needs.
Being more efficient in B2B marketing is also a path towards the lowest common denominator. We see marketers trying it though, but it’s not working out.
(We already wrote about “the efficiency trap” for anyone wanting more of this thinking.)
3. Try to make a significant change
Doesn’t it seem like we’ll need to try harder? Doesn’t it seem like we’re at a critical stage?
Going into 2024 with a widening gap between what it costs to get a customer and our ability to do so, isn’t there a need for a bigger change in how we approach the challenge?
If you think mathematically about the situation, you’ll only be able to conclude one thing:
We need compounding results.
We have to get more out of our marketing investments.
And how do we get that?
For starters, we can do a full audit to uncover exactly how much friction our buyers experience. And then reduce that friction dramatically. Possibly through a new framework altogether.
(You may have heard about our bias towards the formula over the funnel.)
Another big thought that might inspire a bigger change:
Realize that in order to be a growth leader tomorrow, you have to become a trust leader today.
But the biggest way to think about this conundrum that most B2B marketing teams find themselves in right now is to re-imagine how a company has to think about itself in 2024.
Remember over a decade ago when McKinsey or somebody came out and proclaimed:
Every company is now a software/technology company.
Companies had already been relying on tech for a long time, but we had hit a point where it was becoming too much of a competitive disadvantage not to orient more around being an actual software or technology company.
And let’s get it straight. That wasn’t to be cool – that was to drive and sustain…
The. Growth. Of. The. Business.
And it called upon the company to look beyond what those few folks over in Marketing were doing. Leadership had to acknowledge that this was core to growth. And align accordingly.
Well, what if the new version of that was:
Every company is now a customer acquisition company.
The idea of acquiring customers is far from new, but it’s now harder than ever to actually do it – significantly harder.
So much so that if we as marketing leaders don’t educate the rest of our orgs on the disadvantage of not orienting ourselves more around the idea of making customer acquisition a core initiative across the company, 2024 won’t be any easier than 2023.
What if figuring out how to acquire customers in a way that would drive compounding results was viewed as just as critical as building a solid product?
Or, more interestingly, shouldn’t it be?
It’s quite possibly the change companies have to make in order to counter this double whammy