The Costly Marketing Mistakes You Must Avoid

Name: The Costly Marketing Mistakes You Must Avoid
Uploaded: 2024-04-27T13:03:38+00:00
Duration: 50 s
Channel: Jason M. Lemkin
Description: In this segment, Jason M. Lemkin explains why many companies get marketing wrong because they rely on overly simplistic ROI metrics, especially Customer…

27 Apr 2024 · 1 min

Watch on YouTube

0:50

In this segment, Jason M. Lemkin explains why many companies get marketing wrong because they rely on overly simplistic ROI metrics, especially Customer Acquisition Cost (CAC). He illustrates the flaw with a $5,000‑a‑year SaaS deal: spending $5,000 to acquire a $5,000 customer makes no sense, yet many marketers treat CAC as a hard ceiling. Lemkin points out that a lot of acquisition happens through viral, word‑of‑mouth channels that have near‑zero CAC, and that the true cost of acquiring a $5,000 customer can be much higher (e.g., $10,000) but is justified when the customer stays for multiple years, refers friends, or contributes to fundraising success. He warns that if marketers view CAC too simplistically, they will under‑invest in marketing, leading to stagnation and failure.

Chapters

Because the problem in marketing, Harry, is everything has crappy ROI. If you wanna talk about marketing, here's the problem. This is why CAC is such a flawed metric. Because if your cust— let's say your average deal size is $5K, a $5K a year customer, you're actually not gonna have anything that's where you can spend $5,000 to get a $5,000 customer. You're gonna have a lot of stuff that's viral, that's free, that's word of mouth, that's people telling their friend, that CAC, the marketing's close to zero, right? Even with other work. And then frankly, your average customer is going to cost you like $10 grand to get $5 grand, right? And if they stay 5 years, you're ahead. If they refer their friends, you're ahead. If you steal it from a customer, you're ahead. If you hit your plan and raise the round, you're ahead. But all of these marketing programs are too expensive. And so if you view them too simplistically, you just don't market. And that's what people are doing. They're just doing nothing and, um, it's going to fail them.