Account-Based MarketingvsCustomer Acquisition Cost (CAC)

Account-Based Marketing (ABM) is a highly focused B2B strategy where marketing and sales teams align to target a specific, predefined list of high-value client accounts, rather than casting a wide net to capture individual leads. In ABM, you treat each highly valuable account as a 'market of one', creating personalized campaigns tailored specifically to that company's unique needs.

CAC is the total cost of convincing a potential customer to buy your product. This includes all marketing spend, sales team salaries, tools, and overhead directly tied to acquiring new customers. The formula: CAC = Total Sales & Marketing Spend ÷ New Customers Acquired. A company spending $50K/month on marketing and sales and acquiring 100 customers has a $500 CAC. CAC varies dramatically by channel — paid ads might be $300 CAC while organic content is $30. VCs obsess over CAC because it determines unit economics: if CAC exceeds LTV, every customer you acquire destroys value.

The most common trap is 'ABM in Name Only.' If your marketing team creates a list of 500 target accounts and simply runs the exact same generic LinkedIn ads to all of them, that is just traditional targeted advertising, not ABM. True ABM requires deep, account-level personalization.

The most dangerous mistake is calculating 'blended CAC' by averaging all channels together. This hides the fact that your Google Ads channel might have a $200 CAC while organic has a $5 CAC. Blended CAC at $100 looks fine — but if you scale by doubling ad spend, CAC doesn't stay at $100; it approaches $200 because you're scaling the expensive channel. Always track CAC per channel. The second trap: excluding sales salaries from CAC. If you have 4 sales reps at $10K/month each and they close 40 deals/month, that's $1,000 in 'hidden' CAC per customer on top of marketing spend.

Align sales and marketing to build a 'Tier 1' target list of your top 20 dream accounts. Create a bespoke landing page, personalized direct mail package, and customized outreach sequence for each specific company, addressing their exact pain points and naming their executives.

Calculate CAC by channel: Paid CAC, Organic CAC, Referral CAC, Outbound CAC. For each: total spend on that channel ÷ customers from that channel. Kill channels where CAC > LTV/3 (not LTV/1 — you need margin for overhead). Track CAC trend monthly — increasing CAC often means market saturation or competitive pressure and requires immediate investigation.