Go-To-Market StrategyvsCustomer Acquisition Cost (CAC)

A Go-To-Market (GTM) strategy is the plan for how you'll reach, acquire, and serve customers profitably. It answers three questions: WHO is your ideal customer? HOW will you reach them? WHY will they choose you over alternatives? There are three dominant GTM motions: Sales-Led (Salesforce, $80K+ ACV), Product-Led (Slack, Figma, <$1K ACV self-serve), and Channel-Led (Microsoft through resellers). Choosing the wrong motion for your price point and buyer is the #1 reason startups stall at $1-5M ARR.

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 fatal trap is running a Sales-Led GTM with a Product-Led price point (or vice versa). If your product costs $29/month, you cannot afford a $15K CAC from a sales team — the math doesn't work. Conversely, if you're selling a $200K enterprise contract, a 'sign up free' button won't close deals because enterprise buyers need RFPs, security reviews, and executive alignment. Dropbox tried to go upmarket with sales reps for a $150/user product and burned $100M before pivoting back to PLG.

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.

Map your GTM motion to your ACV: Under $1K ACV → Product-Led Growth (self-serve, free trial, community). $1K-$15K ACV → Inside Sales (demo-led, 2-4 week sales cycle). $15K-$100K+ ACV → Field Sales (relationship-led, 3-6 month cycle). Calculate: GTM Efficiency = Net New ARR ÷ Sales & Marketing Spend. Target: >1.0 for healthy, >1.5 for efficient. Below 0.5 means your GTM motion is wrong for your market.

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.