Does Industry Expertise Matter When Building Your Customer Acquisition Muscle?
Whether you are hiring a new team member or onboarding a new outside marketing partner, business leaders from B2C and B2SMB businesses often wonder about industry expertise.
My two cents?
Focus on expertise that can adapt to your growth stage and has a proven track record with your business model.
Industry knowledge is a bonus, but not the most critical factor because you can find it somewhere else in your organization.
Here are the three experiences I focus on, ranked by priority:
Experience with Growth Stage
Your company's growth stage should be the primary driver of who you partner with. When scaling, you’ll often need high-velocity learning and rapid iteration. Look for a team that is nimble, can keep pace with your evolving needs, and understands the next growth stage.
Experience with Business Model
When it comes to customer acquisition, prioritize expertise in your specific business model or dynamics.
eCommerce businesses should seek teams with eCommerce experience (catalog size, lifetime value dynamic, margin dynamic).
Subscription-based companies should work with those who understand recurring revenue models (pricing, churn).
DemandGen businesses must have teams that have experience with longer funnels and building strong relationships with sales teams.
Seasonal or event-based businesses need experts who know how to handle demand fluctuations.
Industry Knowledge
While important, industry-specific knowledge is less critical than growth stage and business model alignment. However, industry knowledge will be very relevant for:
- Teams in charge of Creative and messaging
- Teams in charge of CRM and audience engagement
The bottom line?
Industry knowledge is critical to understanding industry-specific consumer behavior.
If you have that muscle with the right Brand, Creative, and/or CRM team members, then you don’t necessarily need it for your Customer Acquisition teams.
Listen to my full conversation about this on the Growth Trends Show: https://buff.ly/3RDT0cZ
David Manela
David Manela is the founder of Exactius and creator of the Growth Operating System — a framework for deploying capital-efficient, compounding growth inside scaling companies.
FAQ
Frequently asked
Does industry expertise matter when hiring for customer acquisition?
In this post, the author argues that industry expertise matters less than experience with your growth stage and business model when choosing a customer acquisition hire or outside partner. In the author's view, industry knowledge can come from other parts of the company, such as brand, creative or CRM teams, so acquisition talent can be judged first on stage and model fit.
What business-model experience should a customer acquisition team have?
The author recommends matching experience to your business model. Ecommerce companies should look for teams familiar with catalog size, lifetime value and margin dynamics. Subscription companies need pricing and churn experience. Demand generation businesses need people used to long funnels and close work with sales, and seasonal businesses need experience managing swings in demand.
Which teams benefit most from industry knowledge?
The author points to creative and messaging teams and to CRM and audience engagement teams, since both depend on understanding how customers in a specific industry behave. In the author's view, if those teams already hold industry knowledge, a customer acquisition team can be chosen mainly for its experience with similar growth stages and business models.
What is a good LTV to CAC ratio?
Investor David Skok, writing on his For Entrepreneurs blog, recommends that customer lifetime value be more than three times customer acquisition cost for a healthy SaaS business. His model assumes gross margins of 80% or higher, so the 3x benchmark may not carry over directly to businesses with lower margins, such as ecommerce or consumer subscription brands.
What is the difference between blended CAC and paid CAC?
Blended CAC divides total acquisition spending by all new customers, including those from organic channels. Paid CAC counts only customers acquired through paid marketing. Andreessen Horowitz's 16 Startup Metrics guide says investors treat paid CAC as more important for judging a business's viability, because blended CAC can hide whether paid campaigns are profitable.
What costs should be included in customer acquisition cost?
Andreessen Horowitz's 16 Startup Metrics guide says CAC should reflect the full cost of acquiring a customer, stated per customer. The guide warns against leaving out referral fees, credits and discounts, since these are also acquisition costs. It adds that investors often want to see paid CAC broken out by channel alongside the blended figure.
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