Why does CAC Matter?
Everyone in SaaS understands the importance of CAC, but is still often misunderstood. CAC is a relative metric — and its corresponding “partner” metric is customer lifetime value. Without knowing what one customer is worth over the duration of their time with you (LTV), CAC is not incredibly useful. A $10,000 CAC looks high, but for a company with an LTV of $500,000 it is a drop in the bucket!
Deeper insights into content marketing and CAC
Content marketing has never been more in vogue. Off the back of Wordpress, HubSpot, Marketo, and countless other companies, the U.S. is about to see nearly 30MM blogs, and the entire world is seeing roughly 5 times that.
To answer Brian's question we looked at over ten thousand different blogs, two orders of magnitude more blog posts, as well as nearly one thousand different subscription companies. Here's what we found.
No obligation ask: Click to tweet and thank Brian Balfour for his question (you can edit before sharing).
CAC is up nearly 50% over the past five years
Customer Acquisition Cost (CAC) is up across the board for both B2B and B2C companies has increased by nearly 50% over the past five years. Yet, CAC based on channel tells a different story. While paid CAC is still higher than that of content marketing, CAC for content is actually closing the gap very quickly. Content marketing is showing you can get new customers and retain old ones all while keeping marketing costs down.
Essentially, we're finally seeing content marketing come into its own and mature like the paid world did a few years back. . A decline in paid CAC could lead to marketing teams lowering their total costs and increasing their marketing expenses in content marketing and organic growth.
Content quality and output increasing dramatically
Compared to five years ago, we're publishing over 300% more per month, we're writing posts that are nearly 100% longer in word count, and we're paying content marketers and creators nearly 25% more, with a shoutout to HubSpot for making content marketers in our backyard of Boston 40% more expensive.
Content effectiveness is dropping compared to the past
Quality is increasing, but content effectiveness is dropping. The average number of shares per post has actually fallen by nearly 90% compared to two years ago.
Plus, the life of an offer - like an ebook - is actually dropping in effectiveness, as measured through lead velocity. An offer's effectiveness used to be roughly 6 months, whereas today that effectiveness has dropped to less than three.
Is content marketing dead?
So, is content marketing dead? Are we going to delete our HubSpot account as soon as we get done with this post? Of course not. Now is the time you need companies like HubSpot more than ever. Think of it this way - if the cost for me to give you a dollar goes from ten cents to twenty five cents, you'd be insane not to still pay me for the dollar. Content is getting mature, but the ROI is still amazing.
It's always been a struggle for companies to keep their cost per acquisition low. Content marketing offers a sustainable way to keep your marketing in-house and on track, all while having lower marketing budgets (less ppc, paid ads, etc). The number of customers you can pick up from putting out high-quality content could lower your average cost per lead and take pressure off your sales team, why not give it a shot?
47% of buyers still view 3-5 pieces of content before engaging with a sales rep, companies with blogs still get 67% more leads than those that don't, and inbound close rates are still 8-10x those of outbound efforts. What could modern SaaS companies do if they focused more marketing efforts on inbound marketing?
Plus, CAC Ratio's for content still tends to be roughly 30% better than the paid side, because of the compounding nature of content.
That's all for this week. We look forward to bringing you more data and insights about the subscription economy soon.
*** If you missed any of our other episodes you can find them here: ***
Episode 4: Freemium Benchmarks
Episode 5: Integration Benchmarks
Episode 7: Expansion Benchmarks
Episode 8: Discounting Benchmarks
Episode 9: Value Metric Benchmarks
