How can we reduce CAC?

The most frequently asked question from PM is, "How can we reduce CAC?" Have you heard it often? 😄 You know that the CAC Ratio is the Key SaaS Metric for measuring Customer Acquisition and Expansion Efficiency. As a marketer, I can confidently say that the CAC ratio is a game-changer in understanding the effectiveness of your marketing efforts in generating new ARR. It helps define whether it's time to expand marketing channels or if something with the marketing funnel needs improvement. Here's why it's so important: 🍏 CAC ratio measures the investment Marketing needed to generate $1 of new ARR, focusing solely on bringing in new customers and expanding existing ones. 🍊 It eliminates the noise of Churn and downgrades in subscription plans, providing a clear view of your customer acquisition total costs. 🍌 It's tricky, but you should differentiate the efficiency of acquiring a new customer (New CAC Ratio) from the combination of new customer + existing customer expansion (Blended CAC Ratio). 🍑 Use advanced segmentation, considering sales expenses and allocating operating costs like infrastructure, for a comprehensive ARR view. For short-term metrics like MRR or specific releases, allocate expenses. 💁 Note: Early-stage startups should focus on New CAC Ratio before PMF and gaining paid users in the first year. 🥝 Check and consider Benchmark reports. In conclusion, as shown in my own practice, if the New CAC Ratio goes up but the Blended CAC Ratio goes down, it's a positive sign for those using omnichannel marketing, cross-sell, up-sell motion, implementing learning guides aka Academia, customer success management direction, and working on improving retention metrics! 😎 Share your tips on managing the continually rising CAC. Do use Blended CAC? I am particularly interested in strategies for startups in their early stages.