What's up, it's Zayd.

I hate to break it to you, but most companies are calculating their Customer Acquisition Cost (CAC) wrong.

They look at marketing spend and sales salaries, pat themselves on the back, and call it a day. But by neglecting to count critical costs like sales team salaries, tool expenses, or engineering hours spent on sales automation, you could be underestimating your CAC by up to 4x. Those hidden costs are silently eating away at your margins.

This week, I'm exposing the hidden costs that are making your CAC calculator lie to you, and sharing a framework to calculate your true acquisition costs.

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Zayd’s Picks

My favorite finds of the week.

• How to identify the root causes of a prospect’s pain (link)

• Email open tracking is dead (link)

• 5 important learnings from the founder of Default (link)

• 2 must-dos to revive your open rate (link)

• How to generate demand on autopilot (link)

• Market segmentation insights for b2b startups (link)

Why Your CAC Calculator is Wrong

Most companies track the obvious costs:

• Ad spend

• Marketing tools

• SDR salaries

• Commission

But here's what they're missing:

The True Cost of Poor Targeting

Think you're spending $100 to acquire a lead? Try multiplying that by 3.

Every bad lead costs you:

• SDR time qualifying

• AE time on discovery calls

• Engineering resources on custom demos

• Customer success time on poor-fit customers

• Brand damage from churned customers

And that's before we talk about opportunity cost.

Hidden Operational Inefficiencies

Your tools aren't free just because they're already paid for. Every hour spent managing them is an hour not spent selling.

Looking at marketing spend alone to calculate CAC is like only counting the cost of coffee beans but ignoring that you bought a $2000 espresso machine to brew them.

Recent data shows B2B sales teams waste massive amounts of productive time:

• 28% on data entry

• 23% switching between tools

• 20% researching prospects

With sales teams using an average of 7 tools daily, this lost productivity adds up to thousands of dollars per rep annually.

A Framework for Accurate CAC

Here's how to calculate what you're actually spending:

1. Direct Costs

• Marketing spend

• Sales salaries

• Tools and software

• Content creation

• Events/conferences

2. Hidden Costs

• Engineering time on sales tools

• Data cleanup and maintenance

• Training and onboarding

• Failed campaigns/experiments

• Churned customer impact

3. Opportunity Costs

• Time spent on bad-fit prospects

• Delayed pipeline from poor targeting

• Lost deals from slow response times

• Revenue leakage from poor handoffs

The Real Math

Take your total spend for the last quarter. Add 20% for hidden operational costs. Add another 30% for opportunity costs.

Divide by customers acquired.

That's your real CAC.

Fixing The Problem

Start by:

1. Defining a razor-sharp ICP

2. Building robust lead scoring

3. Implementing proper tracking

4. Measuring full-funnel metrics

5. Calculating all-in costs monthly

How I Can Help?

Let me book sales calls for you while you’re being cool with your follow ups. Seriously.

I built Valley to be your automated SDR and empower AEs. Get started today and watch your calendar fill up with qualified leads.