Acquisition isn’t the most effective channel
After looking at 10,432 blog posts on growth, we learned that 7 out of 10 articles are being written about acquisition. Even more, less than 10% of those blog posts are being written about monetization. It’s clear to see based on the numbers that we all love to talk about acquisition. However, the Price Intelligently team has a bold claim to put up against the SaaS community.
Bold Claim: Acquisition is not the most effective channel for growth.
This claim is backed up with pure data. We ran a test with 512 SaaS companies improving each growth lever by the same percentage to compare and contrast the results. We improved acquisition, monetization, and retention by one percent each. The improvements made by each lever of growth were 3.32%, 12.70%, and 6.71%, respectively. As the data shows, monetization has the largest impact by far on your bottom line. It gives you the necessary leverage to scale growth without exhausting all of your resources. Further, improving retention and monetization has 4x the impact of focusing on acquisition.
"Quantified Monetization = 4x increase in your profits"
What we find in most companies we come across is that they like to take the path of least resistance in terms of growth. In this context, that path is usually dumping piles of money into acquisition channels and hoping for the best. Teams will spend money on Google ads, Facebook ads, etc, without really considering the impact those channels have on the business. Patrick warns that if you’re not careful, you and your business will become "CAC fiends." To elaborate, you become a company addicted to customer acquisition, as opposed to being a company that understands the best methods of growing your SaaS business sustainably.
We all want customers to prove that our businesses actually work. However, the truth is, we don’t actually know what to do when we get them. Most look at acquisition as the sledge hammer that can knock down the door to growth but many can’t actually afford the acquisiton efforts they're utilizing. Fear not! There is still light at the end of the tunnel. You can improve your company's growth by mastering the art of monetization.