CAC is the most interesting problem in business because a low CAC makes for interesting unit economics. And, CACs can have unconventional solutions.
“For kids that have taken the SAT, schools can buy their names for fifty cents a name from the College Board, which oversees the test. Schools get the name and address of a kid who went to the trouble to take the college entrance exam which is a good sign of a prospective applicant and someone where it would make sense to mail a shiny catalog, postcard, or other marketing material.” – Sally Herships, September 2021
Some colleges buy sixty-thousand names! Buying names is a customer acquisition cost. The thinking being that kids who take tests to get into college will be good customer of college. It’s not the best CAC attack we’ve looked at, but here’s a list for you to see for yourself.
In 1912, Leon Leonwood Bean got a list of out of state hunters who might need his duck boots. In 1918 each American G.I. got a Gillette shaving kit. In 1959 Warren Buffett wrote a letter to his shareholders. In 1975 Michael Dell thought the best families to sell newspaper subscriptions to were new families, sourced from the newlyweds section of the paper.
The ’80s Tupperware inspired the ’90s Hotmail signature. In 1999 Zappos paid $18,500 per customer for one advertising campaign. In 2004 Zillow launched with the Zestimate. It was Bill Gurley who told the founders they better think of a way to generate attention (and customers!) because buying ads to sell ads wasn’t a good business. In 2011 antiques attention sold shirts.
So, there’s a lot of ways to test for good customers.
This blog post? A CAC for my Gumroad store, a collection of non-fiction short stories.
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[…] can be a ‘hard’ expense: Zappos, college students, or Peloton. CAC can be ‘soft’ too: F1 racing or American Pickers merchandise. Another […]
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