Capital Efficiency Report

02The scorecard at a glance

Six outputs, each answering a decision rather than describing an activity. The detail behind each one follows in the sections noted.

The inputs supplied

The diagnostic is only as good as what goes into it. These are the figures you provided, or that were reconstructed from your systems, with retention costs separated from acquisition throughout.

Table 1Acquisition and retention costs are held separate. Mixing them is the most common single cause of a CAC figure that answers neither question.

03Fully-loaded CAC, and net CLV

Finding 01 · Your fully-loaded cost to win a customer is £44,500

The finding. Your reported CAC of £16,000 captured paid media, events and agency fees. Adding the loaded sales and marketing headcount (£18,900), the business development and SDR effort (£5,600), and the technology that supports acquisition (£4,000) brings the fully-loaded cost of winning one new customer to £44,500. Retention costs are held out throughout, so the figure answers the acquisition question alone.

What this means. The £28,500 difference is not new spending. It is spending you already make, attributed to the activity it belongs to. The convention that produced the reported figure, counting only the money that leaves your business as marketing, is common and is not a reporting failure. It simply answers a narrower question than the one capital allocation asks: not what did marketing spend, but what did it cost to win a customer.

The impact. Your reported figure represented 36% of the loaded cost, so decisions priced against it were priced against roughly a third of the real number. Every acquisition judgement you have made on it, channel budgets, segment focus, sales capacity, carries the same distortion, and will continue to until the loaded figure becomes the planning figure. Addressed by R3 and R4.

Finding 02 · Your net lifetime value per customer is £23,625

The finding. Lifetime value was being read as contract value across tenure, before margin and without discounting. Read on gross margin, net of the cost to serve, and discounted to present value, the lifetime value of one of your customers is £23,625, against the £60,000 in view.

What this means. Revenue is not what a customer returns to you. Margin is, and it arrives over time rather than at once. The build below applies each correction in turn: gross margin at 70% takes your £30,000 contract to £21,000 a year; your average retained tenure of 2.0 years gives £42,000 of gross margin across the customer's life; the 25% cost to serve removes £10,500; and discounting future margin at 10% removes a further £7,875. None of these are pessimistic assumptions. They are the conventions your finance team would apply to any other investment of the same size.

The impact. The revenue-based figure overstated what each customer returns by roughly 2.5 times. Read together with Finding 01, this is the second of the three movements that carried your reported ratio to 3.8:1: one lightened the cost, one inflated the return, and they compounded. Addressed by R2.

Table 2Your revenue-based, undiscounted CLV overstated the return by roughly 2.5 times. Read with Finding 01, both corrections move the ratio in the same direction.

04Marketing attribution, claimed against verified

The third movement behind your reported position.

Finding 03 · Your reported pipeline is credited 2.9 times over

The finding. Under multi-touch attribution, every channel a buyer touches claims a share of the same opportunity, so your channel totals sum to more pipeline than you originated. Re-cut to first-touch, the channel that genuinely started each opportunity, your claimed contribution of £6.0m reconciles to £2.1m, an over-claim of 2.9 times.

What this means. This is not a reporting failure by your marketing team, and the channels are not competing for credit dishonestly. Multi-touch is the default in most CRM and automation platforms, and it is genuinely useful for understanding influence: it answers "what did the buyer encounter?". It cannot answer "what created this opportunity?", because it deliberately shares one opportunity across many claimants. Used for capital allocation, that sharing double-counts, and the over-claim is largest in the channels that touch buyers late (outbound at 4.5 times, events at 3.8 times) rather than those that start them.

The impact. This is the third movement, alongside the cost and value corrections, and it compounds them. Cost was understated, value was overstated, and pipeline was over-credited, all at once and all in the same direction. It also means channel budgets have been set against contribution figures that cannot be reconciled to originated pipeline, so the money has been following influence rather than origination. Addressed by R4.

05The ratio, payback, and Capital Burn Velocity

The ratio tells you if. Burn Velocity tells you how fast.

Finding 04 · Each customer you win opens a gap of £20,875

The finding. At £44,500 to win a customer worth £23,625, you are £20,875 short on each new customer before that customer has repaid the cost of acquiring them. At your rate of roughly 3.3 new customers a month, that per-customer gap becomes a rate: approximately £69,600 a month, or £835,000 a year at run-rate.

What this means. A ratio tells you whether the engine repays. A velocity tells you how quickly the position moves while you decide what to do about it, which is the number a board needs. It is worth being precise about what it is not: this is not your total cash burn, and it is not your runway. It is the rate at which one activity, winning customers the way you currently win them, moves capital off the table. It is also the reason the position is easy to miss. Nothing fails visibly at 0.53:1; the engine simply runs, and the cost accrues.

The impact. Your loaded payback of about 25 months now sits beyond your average tenure of about 24 months. That is the sharper edge of this finding: on today's economics the typical customer leaves before repaying what it cost to win them, so the shortfall is not deferred revenue that arrives later. It does not arrive. Addressed by R1, R2 and R3.

Table 3The per-customer gap carried through to an annual rate, at your current pace of acquisition. It isolates the acquisition engine alone, and excludes retention and every other cost in the business.

Finding 05 · Below break-even, growth widens the gap

The finding. Because each new customer currently costs more than it returns, additional volume adds to the shortfall rather than reducing it. On today's economics, every extra pound of acquisition spend and every extra customer won widens the gap.

What this means. This inverts the usual relationship between growth and efficiency, and it is the most counter-intuitive part of the position. Scale normally improves unit economics. Here it cannot, because the unit itself is loss-making: multiplying a negative does not change its sign. The common response, investing harder into growth to earn the way out, accelerates the loss rather than closing it, and it does so quietly, because volume rises at the same time.

The impact. Your growth plan and your recovery are, for the moment, in tension. Any target that increases new-customer volume before the unit economics reach 1:1 will increase the annual shortfall roughly in proportion. The sequence therefore matters more than the ambition: reach 1:1, then scale, and the same plan becomes accretive. Addressed by R4 and R5.

06The segment breakdown, and benchmarks

Finding 06 · No segment has reached break-even, and SMB is furthest from it

The finding. Your blended 0.53:1 is an average of three different economics, not a single position. Split out, your SMB book runs at 0.23:1 and carries £407,000 of the annual shortfall, 49% of the total, on 55% of your new logos. Mid-market runs at 0.57:1 (£325,000) and enterprise, your strongest, at 0.79:1 (£103,000). None has reached 1:1.

What this means. A blended ratio hides as much as it reveals, and here it hides the most important fact about your engine: there is no healthy segment subsidising the rest. In most businesses with a poor blended number, one segment is carrying the others, and the recovery is a reallocation towards it. That option is not open to you yet. Your strongest segment still returns 79 pence in the pound. Enterprise wins few customers and comes closest to repaying; SMB wins the most and is furthest from it, which is why the blended figure sits nearer the weak end than the strong one.

The impact. Your growth is concentrated in your least economic segment, so volume and shortfall are currently rising together. It also sets the order of the recovery: SMB is where roughly half the addressable capital sits, and it is the segment where the change is structural rather than incremental, because the cost of the sales-led motion is greater than anything that book can repay. Addressed by R1 and R5.

Table 4Your unit economics split by segment. SMB wins the most customers and carries the largest share of the shortfall: 55% of new logos, 49% of the total. Enterprise wins fewest and comes closest to repaying, but still falls short of 1:1.

Table 5Your position against the standard references. On the reported, media-only basis the engine read as healthy: a 9-month payback and a ratio near 3.8:1. Both figures are internally consistent; they simply measure a narrower question.

07Recommendations: the recovery

Ranked by the capital each addresses at run-rate. Every recommendation is referenced to the findings it answers, so the report can be read in either direction: forward from a finding to its remedy, or back from a recommendation to the evidence for it. The aim is not for you to spend less on marketing. It is to bring the engine to the point where it repays what it costs, and then to grow it. Each recommendation sets the direction, the capital it addresses, an owner and a horizon. The build itself, the specific programmes, targets and the order they are executed in, is the work of the Marketing & Capital Plan, which turns these directions into a costed, sequenced plan your team can run.

08Your reviewed read

The report is the artefact. The read is the meaning. A specimen of how the findings are talked through, in plain terms, at the read-out.