Mark Gabrielli (CMO)

CAC Isn’t a KPI. It’s a Red Flag.

CAC Isn’t a KPI. It’s a Red Flag.

—

by

Mark Gabrielli
in

CAC Isn’t a KPI. It’s a Red Flag.

CAC Isn’t a KPI. It’s a Red Flag.

Customer Acquisition Cost (CAC) is not the strategic north star marketers think it is. It’s a red flag waving in the face of lazy growth strategies, short-term thinking, and budget-blind leadership. Here’s why it’s time to stop worshipping at the altar of CAC and start building smarter, more sustainable marketing machines.

Let’s Get One Thing Straight: CAC Is a Lagging Indicator

Imagine driving a car by staring only at the rearview mirror. That’s what obsessing over CAC looks like. It tells you what happened, not what’s happening. And by the time you realize your CAC is bloated, your pipeline is already clogged, your sales team is panicking, and your CFO is sharpening their budget axe.

Here’s the truth: CAC is a lagging indicator. It reflects the cost of past decisions, not the quality of your current strategy. If you’re using it as your primary KPI, you’re not leading—you’re reacting.

Why CAC Worship Is Killing Your Marketing Strategy

Let’s break down the real problems with CAC obsession:

  • It rewards short-termism: Slashing CAC often means cutting corners—cheap traffic, low-quality leads, and gimmicky campaigns that don’t build brand equity.
  • It ignores customer value: A low CAC means nothing if your customers churn faster than a TikTok trend. Lifetime value (LTV) matters more.
  • It punishes brand investment: Brand-building takes time and money. CAC doesn’t account for long-term brand equity, so it penalizes strategic patience.
  • It’s easily gamed: Want to lower CAC? Just stop spending on top-of-funnel. Congrats, you’ve optimized yourself into irrelevance.

In other words, CAC is the marketing equivalent of a crash diet. Sure, you’ll lose weight fast—but you’ll also lose muscle, energy, and long-term health.

What You Should Be Tracking Instead

If CAC is a red flag, what should you be watching? Here are the metrics that actually matter:

These metrics tell you if your marketing is building something real—or just burning cash for clicks.

The CAC Trap: A Case Study in Strategic Myopia

Let’s talk about a real-world example. A SaaS company I consulted for was obsessed with CAC. They had it down to the penny. But their churn rate was 35%. Their LTV barely covered their CAC. And their brand? Nonexistent.

They were spending $1.2M a quarter to acquire customers who left within six months. But hey, their CAC was “optimized.”

We shifted their focus to LTV, retention, and brand investment. Within two quarters, churn dropped to 18%, LTV doubled, and CAC actually increased—but so did profitability. Because they were acquiring better customers, not just cheaper ones.

Framework: The 3-Lens Model for Smarter Marketing Metrics

Here’s a framework I use with clients to escape the CAC trap:

1. Lens of Value

  • What’s the long-term value of the customer?
  • Are we acquiring customers who stick, spend, and refer?

2. Lens of Efficiency

  • How efficiently are we turning spend into revenue?
  • Are we scaling profitably, not just cheaply?

3. Lens of Brand

  • Are we building awareness, trust, and preference?
  • Is our marketing creating future demand—or just chasing clicks?

When you evaluate your marketing through these three lenses, CAC becomes just one data point—not the whole story.

Why Finance Loves CAC (And Why You Should Push Back)

Let’s be honest: CAC is CFO catnip. It’s simple, quantifiable, and fits neatly into a spreadsheet. But marketing isn’t a spreadsheet—it’s a strategy.

As a CMO, your job isn’t to make finance comfortable. It’s to drive growth. That means educating your executive team on why CAC is incomplete—and what better metrics tell the real story.

Push back. Show them the full picture. And remind them that the cheapest customer isn’t always the best customer.

Truth Bomb

If your entire marketing strategy can be reduced to a single number, you don’t have a strategy—you have a spreadsheet fetish.

Mark Gabrielli
Founder, MarkCMO
[email protected]
www.linkedin.com/in/marklgabrielli

Mark Gabrielli Chief Marketing Officer CMO | Mark Louis Gabrielli Jr. | Mark Louis Gabrielli — Portrait of Mark Louis Gabrielli, strategic CMO and marketing advisor — expert in digital growth, executive branding, and modern marketing systems like the MAGNET Framework at MarkCMO.com
Mark Gabrielli Chief Marketing Officer CMO | Mark Louis Gabrielli Jr. | Mark Louis Gabrielli — Portrait of Mark Louis Gabrielli, strategic CMO and marketing advisor — expert in digital growth, executive branding, and modern marketing systems like the MAGNET Framework at MarkCMO.com
Branding
Marketing
CMO
Business
Leadership
Mark Gabrielli,
Mark Louis Gabrielli Jr.,
Mark Louis Gabrielli

Comments

Leave a Reply

Your email address will not be published. Required fields are marked *