RR#133 - The client acquisition cost wake-up call
One of the most important metrics in your business is the cost of customer acquisition (CAC).
If you know your CAC, you know what it truly costs to bring in a client and—more importantly—what you can afford to spend to grow. CAC is your guide to building a profitable business.
But most business owners don’t know what their CAC actually is.
As a result, they pour endless hours of sweat equity into marketing and sales, trying to make up for an acquisition model that may not even be profitable. Or they continue to throw good money after bad and just barely tread water.
Whether you’re pulling in $250k a year or scaling toward $25 million, knowing your CAC is essential.
For smaller businesses or solo service providers who rely on organic marketing and outreach, though, it can feel next to impossible to pin down this number.
How do you even begin to measure the cost of your time and effort if your client acquisition is wrapped up in organic content, endless LinkedIn engagement, or conversations and outreach in DMs?
This week I’m going to share a practical way to get a rough—but revealing—estimate of your CAC, even if you’re a one-person show.
Step 1: Document Your Acquisition Activities
Start by identifying every task that goes into getting clients.
A typical service business is going to have thing like:
Writing content for social media
Editing and reviews for social media posts
Scheduling and publishing social media posts
Daily social media engagement
Daily DM inbox management and follow-ups
Conducting sales calls
Sales call follow-up
And more.
Write it all down—even the small stuff. The more itemized the list, the more accurate the numbers will be.
Plus, getting it on paper will give you a realistic view of just how many plates you’re spinning.
Step 2: Estimate Time Per Task
Next, determine roughly how much time is spent on each activity every month.
I’d recommend conducting a time audit to help you get an accurate assessment of this because we tend to be a bad judge of how much time we really spend doing things.
If you don’t want to do a time audit, just estimate it. But be brutally honest with yourself here.
Underestimating the time will skew your numbers and mask the real cost of what you’re investing to get a client.
So, that may look like:
Step 3: Assign Market Rates to Each Task
Now assign a fair hourly rate to each of these tasks.
The goal isn’t to calculate the cheapest replacement possible, but to determine the actual market cost of getting this work done well.
If you’re writing content, what would it cost to hire a ghostwriter capable of capturing your voice?
If you’re scheduling content, what would a competent social media manager charge per hour?
If you’re engaging a lot online, how much would it cost to have someone you trust engage on your behalf?
If you’re doing sales calls, what’s the rate for a skilled closer?
The point is to get an accurate look at the expense of each function if it were fully delegated.
Step 4: Calculate Total Monthly Investment
With these numbers in hand, add up the monthly investment required for all of these client acquisition tasks.
This is the total monthly cost of customer acquisition activities.
While it’s still an estimate, you now have a baseline to work from that reflects the actual time, effort, and expertise involved in bringing in clients organically.
Step 5: Determine Your Average Monthly Sales
Now, take a look at your average monthly sales or new client count over a reasonable period—say, the last six to twelve months.
You want the units sold, not the total dollar amount (that would be for lifetime value, which we may explore next week).
Step 6: Divide Your Total Monthly Investment by Average Clients Sold Per Month
Your estimated monthly investment in sales and marketing divided by your average clients sold per month is your estimated CAC.
Why This Matters
When we ran these calculations internally, I’ll be honest—the number was eye-opening. But they were for an $8 million/year MSP I’m conducting a sales audit for right now as well.
And this is a reality I often see with founders: organic client acquisition can demand massive amounts of time and resources that are never factored into the profitability of the business.
Knowing your CAC brings a new level of clarity to the economics of your business and sheds light on why scaling acquisition beyond your sweat equity can be so challenging.
When CAC is high and dependent on your personal input, the business can feel like a treadmill.
But here’s the real power in knowing this number: with it, you can make informed decisions to build a scalable, profitable model. It allows you to assess whether your acquisition process needs streamlining, automation, or even a shift toward paid methods that may reduce your own time investment.
Take Action: Block Out the Time
This exercise might feel daunting, but if you set aside a couple of hours to crunch the numbers, you may find it changes how you look at client acquisition forever.
Even a back-of-the-napkin estimate can reveal whether you’re on the path to sustainable growth—or just one more long week away from burnout.
