A recent study found that the customer acquisition cost (CAC) for B2B and B2C subscription companies has risen almost 50% over the past five years. This isn’t entirely surprising to me since I wrote in September that the CAC for HubSpot has risen over 100% in that period. (Remember: CAC is the average cost to acquire a new customer: all sales and marketing expenses divided by the number of new customers.)
Subscription companies differ from those with traditional pay-per-product business models. They are typically cloud services and include Carbonite backups, security software, and thousands of sales and marketing software companies.
CAC can vary by channel. For years proponents of content and inbound marketing have said that it was more cost-effective than other channels like search and display ads. What the study also found, though, was that the CAC of content marketing is rising even faster and is now approaching that of other channels.
The authors of the study only looked at one industry or business mode: the subscription economy. This reinforces my idea that marketing channels can become saturated and, eventually, inefficient. Subscription companies are especially adept at digital marketing so this is a particularly acute problem for them. In other industries, though, where many companies under-invest in marketing the opportunities are still especially great for the ones that do.
And even if the CAC is rising, companies can continue to use these channels so long as they provide a positive ROI. For now, they do.
