Confidential. This report has been prepared solely for the named recipient and contains commercially sensitive analysis. It may not be copied, distributed or disclosed, in whole or in part, to any third party without the prior written consent of Why Marketing. The figures shown are an anonymised specimen prepared for illustration and do not represent any actual business.
Capital Efficiency Report
Contents
Executive summary
The verdict, the headline numbers, and what it means
The scorecard, and the inputs supplied
Six outputs at a glance; the figures the analysis is built on
Fully-loaded CAC and net CLV
The true cost to win, and the true value won
Ratio, payback and Capital Burn Velocity
If, and how fast
Segment breakdown and benchmarks
Where the capital is going, against the reference lines
Marketing attribution, claimed versus verified
Why the reported pipeline, and the ratio, ran high
Recommendations: the recovery
Top actions ranked by impact, with the marketing levers
Your reviewed read, and method
The interpretation, assumptions and basis of preparation
Capital Efficiency Report
Basis of preparation & disclaimer
Source of data. This diagnostic is built entirely from information supplied by the recipient, or reconstructed from the recipient's own systems, and from assumptions agreed with the recipient. The figures have not been independently audited. Their accuracy depends on the completeness and accuracy of the inputs provided.
Purpose. The report is a commercial decision-support tool. It is intended to inform capital-allocation and marketing-investment decisions, not to serve as a financial audit, statutory account, or formal valuation. Its directional conclusions, rather than its precise decimal figures, are what it is designed to support.
This specimen. All figures in this document are illustrative, internally reconciled to demonstrate the method, and anonymised. They do not represent any actual business or client. A live diagnostic is validated with the recipient's finance team so that its result is one the board will accept.
01Executive summary
Customer acquisition is destroying capital, at a run-rate of roughly £835,000 a year.
CLV : CAC (fully loaded)
0.53 : 1
Below the 1:1 break-even. Below the 3:1 healthy benchmark.
Capital Burn Velocity
£69.6k /mo
≈ £835k a year destroyed by the acquisition engine.
CAC payback (loaded)
≈25 mo
Beyond the ≈24-month average tenure. Most never repay.
The business believed its acquisition engine was running at roughly 3.8:1, comfortably healthy. Measured on fully-loaded cost against margin-based, discounted lifetime value, the true position is 0.53:1: every new customer is won for more than it will ever return. The reported view was not careless. It understated cost and overstated value, and both errors pointed the same flattering way. The five findings below set out what the diagnostic establishes, and the recovery is detailed at the recommendations.
F1The true cost to win a customer is £44,500, not the £16,000 reported. The reported figure left out loaded headcount, business development and the cost of a long sales cycle, and came to just 36% of the truth.£44.5k
F2The true value of a customer is £23,625, not the £60,000 believed. Value was read on revenue, undiscounted; corrected to margin, net of cost-to-serve and discounted, it is 2.5 times smaller.£23.6k
F3The engine destroys £20,875 of capital per customer, and at ≈3.3 new customers a month that is a Capital Burn Velocity of about £69,600 a month, £835,000 a year at run-rate.−£835k/yr
F4No segment has reached break-even, and the SMB book is the worst, running at 0.23:1 and accounting for nearly half the total burn. The business was scaling hardest into its least economic segment.0.23:1
F5Growth currently makes this worse, not better. Below break-even, every extra pound of acquisition spend widens the loss. The recovery is to reach 1:1 before scaling, not to spend the way out.< 1:1
The single most expensive belief in this business was that it was running one acquisition model. It was running three, all below break-even, and pouring the most fuel on the weakest.
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.
01Fully-loaded CLV:CAC, by segmentThe true ratio, calculated on loaded cost and discounted margin.0.53 : 1blended · all segments below 1:1
02CAC payback and Capital Burn VelocityHow long to repay, and how fast capital is moving.≈25 mo−£69.6k / month
03Growth-efficiency readWhat happens to the burn as acquisition scales.Invertedscaling deepens the loss
04The blended-versus-true CAC gapWhy the reported number flattered the business.2.8×reported CAC was 36% of true
05Top actions, ranked by impactWhere the recovery starts, in order of pounds.£835kaddressable at run-rate
06Your reviewed read with AlanThe interpretation, delivered alongside the report.Included45-minute read-out
The inputs supplied
The diagnostic is only as good as what goes into it. These are the figures the business provided or that were reconstructed from its systems, with retention costs separated from acquisition throughout.
Table 1 · Inputs, trailing twelve months
Input
Value
Source
New customers won (12 months)
40
CRM, closed-won
New customers per month
≈ 3.3
Derived
Average annual contract value
£30,000
Finance
Gross margin
70%
Finance
Average retained tenure
2.0 years
Cohort, CRM
Reported CAC (media + programme)
£16,000
Marketing
Cost-to-serve
25% of margin
Finance, ops
Discount rate
10%
Finance policy
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
The reported CAC of £16,000 captured paid media, events and agency fees. It excluded the sales and marketing salaries, the business development effort, the technology, and the cost embedded in a long sales cycle. Loaded in, with retention taken out, the true cost of winning one new customer is £44,500.
Exhibit 1
What it really costs to win a customer
£ per new customer · reported to fully-loaded · 0 to 50k
£16,000
+ £18,900
+ £5,600
+ £4,000
£44,500
Reported CACmedia + agency
Sales & mktgloaded heads
Business devSDR effort
TechnologyCRM + data
True CACfully loaded
2.8×The reported figure was just 36% of the truth. The distortion is the £28,500 the business never counted as a cost of acquisition.
Figure 1A bridge from the reported CAC to the fully-loaded New Customer CAC, each held-out cost added in turn. Retention is excluded throughout, so the number answers the acquisition question alone. Reported CAC commonly lands at 25 to 40 percent of the loaded truth; here, 36%.
Net CLV: value on margin, not revenue
Value was being read on revenue, undiscounted. Corrected to gross margin, net of the cost to serve, and discounted, the true lifetime value is £23,625, not the £60,000 the business had in mind.
Annual contract value£30,000 at 70% gross margin
£21,000 / yr
× Average retained tenure (2.0 years)Gross margin over the customer life
− Discount to present value (10%)Future margin is worth less than margin today
− £7,875
Net CLV (discounted, after cost-to-serve)
£23,625
Table 2Revenue-based, undiscounted CLV overstated value by roughly 2.5 times. Both errors push the headline ratio in the same flattering direction.
04The ratio, payback, and Capital Burn Velocity
The ratio tells you if. Burn Velocity tells you how fast.
At £44,500 to win a customer worth £23,625, the business loses £20,875 on every new customer before that customer has paid back the cost of acquiring them. Multiplied by the rate of acquisition, roughly 3.3 a month, that gap becomes a velocity: the speed at which the engine moves capital off the balance sheet.
Fully-loaded New Customer CAC
£44,500
− Net CLV
− £23,625
Economic gap, per customer
− £20,875
× New customers per month (≈ 3.3)
− £69,600 / mo
Capital Burn Velocity, annualised
− £835,000 / yr
Table 3This is the value-destruction rate of the acquisition engine specifically. It is not total company cash burn, and it is not runway. It is the rate at which winning customers, as currently done, destroys capital.
Exhibit 2
Where the ratio sits, against break-even and healthy
CLV : CAC · the scale pivots on the 1:1 line
1 : 1 · break-even
3 : 1 · healthy
0.53 : 1
believed 3.8 : 1
Below 1:1 · destroying capital
1:1 to 3:1 · margin-of-safety shortfall
Above 3:1 · healthy, creating capital
Figure 2Measured CLV:CAC against the break-even and healthy benchmarks, the scale pivoting on the 1:1 line, not the 3:1 target. The believed position sat in the healthy band; the measured position sits deep in destruction.
The growth-efficiency read
Because the engine is below break-even, growth makes the position worse, not better. Every additional pound of acquisition spend, every extra customer won on these economics, widens the loss. The instinct to spend more to grow out of it is, here, an instruction to destroy capital faster.
05The segment breakdown, and benchmarks
A blended ratio hides as much as it reveals. Split by segment, the £835,000 of annual burn is not spread evenly. The high-volume SMB book accounts for nearly half of it, and not one segment in the business has reached break-even.
Table 4 · Unit economics by segment, trailing twelve months
Segment
New custs
Loaded CAC
Net CLV
CLV:CAC
Destroyed / yr
SMB / self-serve
22
£24,000
£5,500
0.23 : 1
− £407,000
Mid-market
13
£58,000
£33,000
0.57 : 1
− £325,000
Enterprise
5
£99,600
£79,000
0.79 : 1
− £103,000
Blended
40
£44,500
£23,625
0.53 : 1
− £835,000
Table 4The SMB book wins the most customers and destroys the most capital: 55% of new logos, 49% of the burn. Enterprise wins few and comes closest to repaying, but still falls short of 1:1. There is no healthy segment subsidising the rest.
Table 5 · Position against benchmark
Reference
Benchmark
This business
Status
Break-even (capital preserved)
1.0 : 1
0.53 : 1
Below
Healthy B2B acquisition
3.0 : 1
0.53 : 1
Below
CAC payback (loaded)
< 12 mo
≈ 25 mo
Beyond tenure
CAC payback (reported, media-only)
< 12 mo
≈ 9 mo
Flattered
Table 5On the reported, media-only basis the engine looked comfortably healthy: a 9-month payback and an apparent ratio near 3.8:1. That reported view is exactly why the problem went unseen.
06Marketing attribution, claimed against verified
A third reason the reported ratio ran high.
Understated cost and overstated value were two of the errors. The third sat in the pipeline marketing reported in the first place. Under multi-touch attribution, every channel a buyer touches claims a share of the same opportunity, so the channel totals add up to far more pipeline than the business ever originated. Re-cut to first-touch, the channel that genuinely started each opportunity, the claimed contribution falls to roughly a third of what was reported.
Exhibit 3
What marketing claimed, against what first-touch verifies
Pipeline, £m · first-touch basis
Paid searchclaimed 2.7× verified
Claimed
£2.4m
Verified
£0.9m
Events & fieldclaimed 3.8× verified
Claimed
£1.5m
Verified
£0.4m
Content & SEOclaimed 2.0× verified
Claimed
£1.2m
Verified
£0.6m
Outbound & SDRclaimed 4.5× verified
Claimed
£0.9m
Verified
£0.2m
Total claimed
£6.0m
First-touch verified
£2.1m
Over-claim factor
2.9×
Figure 3Claimed pipeline contribution against first-touch verified, by channel. The gap is the double-counting that multi-touch attribution permits, and a large part of why marketing-reported ROI ran ahead of the financial reality. Channel mix shown is illustrative.
Read with the cost and value corrections, this closes the picture. The reported view overstated pipeline, understated cost and overstated value at the same time, and every error pointed the same flattering way.
07Recommendations: the recovery
Ranked by the capital each addresses at run-rate. The aim is not to spend less on marketing. It is to stop the engine destroying value while it grows, then to grow it once it pays back. Each action carries the specific marketing levers that deliver it, an owner, and a horizon.
Rank1
Contain acquisition into the SMB segment, and re-engineer how it is won
Addresses
£407k49% of burn
The SMB book runs at 0.23:1: it recovers 23p of every pound spent winning it. Stop funding it through the high-cost, sales-led motion. The objective is not to abandon the segment but to serve it at a cost it can repay, or not at all.
Marketing levers
Cut paid search and paid social on SMB-intent terms; redirect that budget to mid-market and enterprise demand. Move SMB to a product-led, self-serve acquisition path (free trial, in-product onboarding, low-touch nurture) so cost-to-acquire collapses. Re-qualify inbound so SMB-fit leads are not routed to high-cost sales. Remove SMB logos from SDR and AE incentives.
Owner
CMO + RevOps
Horizon
0 to 3 months
Type
Reallocation, fastest payback
Rank2
Lift net CLV through retention, tenure and cost-to-serve
Addresses
£240kvalue side
Tenure of 2.0 years and a 25% cost-to-serve are the two levers on the value side. Moving mid-market and enterprise tenure toward 2.6 years and trimming cost-to-serve lifts net CLV materially and pulls both segments toward break-even, without winning a single extra customer.
Marketing levers
Stand up lifecycle and customer marketing: structured onboarding, adoption and value-realisation comms, and proactive renewal campaigns. Build an expansion and advocacy programme (references, case studies, community) that lifts retention and feeds lower-CAC referral demand. Feed churn-reason data back into targeting so the business stops acquiring customers who predictably leave.
Owner
CMO + Customer Success
Horizon
3 to 9 months
Type
Value creation
Rank3
Reduce the brand tax on cost of acquisition
Addresses
£120kcross-segment CAC
Every deal currently starts cold and competes on price, which is what a weak brand costs in hard CAC. Building brand and category salience lowers the cost to win across all three segments. It is the one lever that moves both sides of the ratio at once: cheaper to acquire, and easier to retain at full price.
Marketing levers
Rebalance the budget toward a brand-to-activation split nearer 46:54 (Binet & Field / LinkedIn B2B Institute), away from pure lead-gen. Invest in category positioning, a clear point of view, and consistent thought leadership to build mental availability with future buyers. Track share of search and share of voice as leading indicators of falling CAC.
Owner
CMO
Horizon
6 to 18 months
Type
Structural, compounding
Rank4
Re-base CAC reporting to fully loaded, and give the ratio an owner
Addresses
Governancevisibility
The reported figure was 36% of the truth, and no single function owned it. The number that decides whether marketing creates or destroys value cannot be managed if nobody is required to produce it. This is where marketing leads rather than waits: owning the ratio is what turns the budget conversation from defending activity into directing capital.
Marketing levers
Have marketing operations connect the CRM, finance and HR data needed for a fully-loaded, segment-level CLV:CAC. Put the ratio and Capital Burn Velocity on the board pack on a fixed cadence, owned at executive level. Re-cut planning and budget cases around cost-per-retained-value, not cost-per-lead.
Owner
CMO + CFO
Horizon
0 to 6 months
Type
Governance
Rank5
Re-weight the mix toward the segments nearest break-even
Addresses
£68kmix shift
Enterprise comes closest to repaying. Once SMB is contained and net CLV is lifted, a measured shift of acquisition effort toward mid-market and enterprise is what turns the blended ratio positive, more efficiently than spreading spend across all three.
Marketing levers
Stand up account-based marketing on a defined target list of best-fit accounts. Tighten sales and marketing alignment on the enterprise buying committee, with content built for each role in it. Win fewer, better-fit customers rather than maximising logo count, the metric that was masking the problem.
Owner
CMO + Sales
Horizon
6 to 12 months
Type
Mix optimisation
Read together, this is a recovery, not a cost-cutting exercise. Two actions reallocate spend, two create value, and one fixes the governance that let the problem hide. None of them asks for a bigger budget. They ask for the budget to be pointed at retained value instead of logo count.
The recovery
From the verdict to the recovery
This report tells you where the business stands. The Capital Recovery Plan is the fixed-fee engagement that acts on it: scoped to these findings, built to reduce CAC, lift net CLV and slow the burn, with the diagnostic fee credited in full. It is reserved at the read-out, not sold from a page.
Discussed at your read with Alan
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.
Alan Edwards · the read-out
The headline number will sting, so it is worth being clear about what it does and does not say. This is not your cash burn, and it is not a comment on the business as a whole. It is the rate at which one engine, the way you currently win customers, moves capital off the table. At 0.53:1 it is below the line where a customer pays back what it cost to win them.
The part I would sit with is the reported view. On the numbers you were looking at, a 9-month payback and something close to 3.8:1, you were right to feel the engine was healthy. There was nothing careless about it. The figure was understated because it left out the people and the time, and the value was overstated because it was read on revenue. Correct both and the picture turns over. That is the normal shape of the error, not an unusual one.
If I were deciding where to start, it would not be a cost-cutting exercise. It would be the SMB book, because that is where the money is going fastest, and the brand point, because that is the one lever that lowers the cost to win everywhere at once. Growth is not the enemy here. Growth on these economics is. Get the engine above 1:1 first, then it is worth pouring fuel on.
None of this needs to be acted on today. It needs to be seen clearly, by you and by whoever holds the capital. That is what this is for.
Alan EdwardsWhy Marketing · commercial logic applied
Method & assumptions
CAC basis
Fully loaded, acquisition only headcount, BD, technology and programme; retention excluded
CLV basis
Net, margin-based gross margin less cost-to-serve, discounted to present value
Discount rate
10% per finance policy; applied to future margin
Cost-to-serve
25% of gross margin support, success, infrastructure
Tenure
2.0 years blended from cohort retention; varies by segment
Burn Velocity
(CAC − net CLV) × new custs / month annualised × 12; pivots on the 1:1 line
All figures in this specimen are illustrative and internally reconciled to demonstrate the method. They do not represent a real client. A live diagnostic is built from the business's own systems and validated with its finance team, so that the result is one the board will accept as documented fact rather than estimate. The directional conclusions, not the decimal places, are what the diagnostic is for. Prepared by Why Marketing under the basis of preparation set out at the front of this report.
WhyMarketingcommercial logic applied CL-DIAG-SPECIMEN · Final