How Do I Get Scalable Growth?

It's what everyone is after - growing their company. Unfortunately when most founders / C's ask me this, they expect me to give them some marketing magic dust that we can sprinkle on top of their existing plans without going back and asking some fundamental questions about their business.

So let's start with this: Can your company actually grow?

To achieve scalable growth, you need to focus on three key metrics:

• Current CAC (Customer Acquisition Cost)

• Current Payback Period (Time to ROI)

• A Plan for Growth

Let’s dive into each.

1. Understanding CAC (Customer Acquisition Cost)

It costs money to acquire customers. Your CAC is the amount of money you’re spending to bring in a single customer. This number is crucial because if you’re spending more on acquiring customers than they’re worth over time, you’ve got a problem.

But CAC isn’t just a cost issue—it’s an efficiency one. The lower you can get your CAC, the faster you can grow. You need to ask yourself: How much am I spending per lead, per sale, per customer? And which channels are the most cost-effective?

2. Understanding Payback Period

The payback period is essentially how long it takes for a customer to cover the costs of acquiring them (CAC). This is where growth decisions really come into play. Here's a general rule:

• Over 12 months:  Cashflow Problems: You’re in risky territory. If your payback period is over a year, you’re likely burning through cash or at risk of running out before you see a return.

• 6-12 months: Steady Grower: This is sustainable but slow. You have growth potential, but your capital is tied up longer, meaning less flexibility to reinvest in faster growth.

• 3-6 months: High Roller: You’re in a good position here. The faster you recover your acquisition cost, the more agile you can be with scaling your efforts.

• 1-3 months: Dreamer: This is the sweet spot for hyper-growth. If you’re recovering CAC in this short period, you can pour more into marketing and scale quickly.

Understanding your payback period is vital to determining whether you can scale efficiently. If it’s over 9 months, it’s time to reassess. Anything shorter, and you’re set for rapid expansion.

3. Build a Scalable Growth Plan

Once you know your CAC and payback period, it's time to create a growth plan. Your plan should address these key areas:

• Optimize Your Channels: Invest more in the channels that provide the lowest CAC and fastest payback period. Pull back or pivot from those with high costs and long payback times.

• Scale Efficiently: Use data to determine where you can scale your marketing efforts while keeping CAC in check. Consider automating parts of your sales funnel or improving product onboarding to reduce costs.

• Monitor and Iterate: Growth is not a one-time decision. Continuously track your CAC and payback period, and adjust your strategies to maintain scalable growth.

  
  

If your payback is over 12 months and you're not aiming for acquisition or a major capital injection, focus on lowering that timeline by improving your customer conversion rates, increasing average order value (AOV), or refining your marketing efforts.

In Summary: Scalable growth starts with knowing your numbers. If you understand your CAC and payback period and build a plan to improve these metrics, you’re already on the path to sustainable growth. The key is iterating and optimizing constantly to ensure your growth is not only scalable but also profitable.