The B2B Myth You’ve Probably Heard: “CAC Always Goes Up With Scale”

 

The B2B Myth You’ve Probably Heard: “CAC Always Goes Up With Scale”

It’s a comfortable assumption in B2B growth circles: as you scale, your Customer Acquisition Cost (CAC) will climb. Lots of teams take it as a given — and build their growth models around it. On paper, it can look neat: your go-to channels get saturated, new ones aren’t as efficient, so CAC rises.

But what if it doesn’t have to be that way?

At Kiwaluk Digital, we challenged that assumption. In my role overseeing all revenue and business operations, we slashed CAC by over 50%, while ramping up incremental annual recurring revenue growth by more than 80% — pushing past $300 M in ARR and still accelerating. 🚀

So yes, it’s possible to grow fast and keep CAC down. Want to know how? It’s all about mindset: learning from B2C best practices, being laser‑focused on incrementality, using data smartly (even when it’s imperfect), and being bold.

Why Too Many Teams Let CAC Creep Up (And That Doesn’t Have to Be You)

If CAC doesn’t have to go up — why does it usually? More often than not, it’s because of compounding inefficiencies:

• We treat rising CAC as inevitable. Many teams assume growth must cost more — without questioning whether that’s really true for them.

• We overspend on marketing. Once you push a channel beyond its most efficient level, money spent no longer delivers proportional results — you just inflate CAC.

• We throw people at the problem. More heads rarely translate to better outcomes; activity ≠ impact.

• We over-rely on attribution. Attribution models assign credit to channels or campaigns — but they often miss what truly drives incremental, net-new customers.

Attribution-based thinking has two big flaws: it rewards correlation (what happened) over causation (what caused results), and it fosters internal turf wars over “credit,” rather than asking: what actually moves the needle?

🧪 Incrementality: The Mindset (and Method) That Changed Everything

That’s where incrementality comes in — a concept borrowed from B2C growth champs that’s just as powerful for SaaS. Instead of asking “which channel gets credit,” you ask: “what truly caused this lift?”

Here’s the method:

• Use control and test (or “holdout”) groups to compare results — like a medical trial — to isolate what’s actually driving growth.

• Skip vanity metrics or coincidental lifts. Measure what’s real: incremental sign-ups, net-new revenue, retention uplift.

• When a tactic works — double down. When it doesn’t — pause or redirect, rather than keep pumping money because “it looks good.”

The result? You invest only in what adds real value — not what just looks nice on paper.

How You Can Apply This in B2B / SaaS — 5 Principles That Mattered for Us

Here are five guiding principles we followed at Kiwaluk Digital — and that you can use, too:

1. Strip Away Complexity, Don’t Add for Show

Scaling companies often end up with overcomplicated sales funnels: SDR → AE → Sales Engineer → Onboarding → Renewals → Success teams, and so on. Sounds sophisticated — but often, it’s just bloat.

Ask: What parts of this path actually move the sale forward? What’s nice-to-have vs what’s necessary? Simplify, consolidate roles where possible — you might find you lose nothing in revenue but gain a lot in speed and efficiency.

2. Run Real Tests — Not Just Attribution Reports

When you have volume (paid media, PLG funnels, demand gen), run split‑tests or geo‑splits, holdouts, audience‑splits — whatever lets you measure true incremental ROI.

Even in lower-volume sales motions, you don’t need full statistical significance. Directional insights (e.g. one lead-routing method outperforming another) are often enough to guide decisions.

3. Use What You’ve Got — Pre/Post Data Matters

When you can’t run clean experiments (enterprise deals, long-term contracts, services), go back to historical data and use pre/post comparisons. It’s not perfect, but if you detect consistent trends — that’s a signal worth acting on.

Track retention, churn, deal size, upsells — anything that shows whether your changes are sustainable.

4. Default to Automation & AI Before People

Instead of immediately hiring — try automating. Leverage automation and AI tools for outreach, content, personalization, workflows. At Kiwaluk Digital, we did that — headcount grew modestly (~10%), but ARR multiplied dramatically.

In 2025 and beyond, an “AI-first” mindset gives you a serious efficiency edge.

5. Build a Culture of Intellectual Honesty

This, more than any tactic, underlies success. You’ve got to be willing to question assumptions, even sacred ones. Ask:

• Is this motion really driving incremental value?

• Are results real — or just noise?

• If it’s not working, stop it — even if it was your idea.

Be data-honest. Let results, not egos, drive decisions. That courage to constantly re-evaluate is what lets CAC fall while growing faster.

The Real Truth: Discipline > Hope

There’s no magic button that slashes CAC and makes growth explode at the same time. What you need is discipline:

• Simplify where complexity hurts

• Test where data allows

• Model where data is messy

• Automate before expanding

Do that — and you can build a growth engine that scales with confidence, not wishful thinking.

⚠️ Caveat: None of this works if your product doesn’t solve a real problem or lack product–market fit. If CAC keeps climbing even with smart execution, your challenge isn’t just execution — it’s whether your product really resonates with users.

But if you do have product‑market fit? Then here’s the truth: you CAN cut CAC while growing — and you should be skeptical of anyone who says otherwise.

TL;DR

Most B2B teams assume CAC (Customer Acquisition Cost) will rise as they scale. But that’s not a law — it’s just a myth. At Kiwaluk Digital, we cut CAC by 50% while growing 80% faster. The key was shifting our mindset: we prioritized incrementality, embraced AI-first operations, and simplified everything. The result? Faster growth, lower costs, and a GTM engine that actually scales.

What You Should Do Next

✅ Challenge assumptions. Ask if your CAC is truly rising for a good reason — or just due to inertia and bloat.
📉 Start testing for incrementality. Even basic A/B tests or directional pre/post comparisons can reveal what’s truly moving the needle.
🤖 Default to AI & automation. Don’t scale with headcount — scale with leverage.
🔍 Lead with honesty. Let truth (not org politics) drive decisions on what to keep, cut, or double down on.

If you’ve got a strong product, you can grow fast while lowering CAC — it just takes courage, clarity, and the right playbook.

Want help putting this into practice? Let’s chat.