The CMOs Guide To Profitable Growth
This post is part of Convert, the series where the Mutiny team shares conversion playbooks from the world's fastest growing companies. Subscribe here for fresh insights.
Take a look at the chart below:
It shows that the index of unprofitable tech companies has fallen twice as much as the Nasdaq. It's no secret that investors—public or private—are no longer rewarding "growth at all costs".
This means that the capital intensive, ad-driven, top-line growth playbooks many tech companies have been using for the last decade no longer work.
Every company is being asked to shift towards profitable growth. Company boards and Executives are scrambling to rewrite their growth playbooks.
But you can't just take out a scissor and cut your way to profitable growth.
There are 4 major changes all companies need to make to their marketing to achieve profitable growth:
The rest of this post will quickly explain change #1: Shifting to program-level CAC.
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Shifting to program-level CAC
Overall marketing CAC (cost of acquiring a customer) is calculated like this:
The problem with reporting an overall CAC is that there’s no granularity to which marketing programs are performing profitably and which are under-performing.
To drive profitability, you have to understand CAC at the program level, not overall.
This requires breaking out each of your marketing programs so that they can be compared fairly against your target CAC.
This program-level CAC scorecard allows you to see which programs are running over the target CAC and begin to cut or optimize where necessary. It also allows you to fairly compare programs to each other.
This new view into your CAC is the first step in deepening your ability to take action to meaningfully influence the efficiency of your marketing efforts.
In The CMOs Guide to Profitable Growth, we go into much more detail about the 4 ways you can get a grasp on reaching profitability.
Read the full guide here.