Evaluate acquisition channels using unit economics, customer quality, and scalability. Use when deciding whether to scale, test, or kill a growth channel.
Guide product managers through evaluating whether to scale, test, or kill an acquisition channel based on unit economics (CAC, LTV, payback), customer quality (retention, NRR), and scalability (magic number, volume potential). Use this to make data-driven go-to-market decisions and optimize channel mix for sustainable growth.
This is not a channel strategy framework—it's a financial lens for channel evaluation that helps you avoid scaling unprofitable channels or killing channels with fixable problems. Use when deciding how to allocate marketing budget across channels.
Key Concepts
The Channel Evaluation Framework
A systematic approach to evaluate acquisition channels:
Unit Economics — What does it cost to acquire, and what's the return?
CAC (Customer Acquisition Cost)
LTV (Lifetime Value)
LTV:CAC ratio
Payback period
Customer Quality — Do customers from this channel stick around and expand?
相關技能
Cohort retention rate (by channel)
Churn rate (by channel)
NRR (Net Revenue Retention by channel)
Expansion rate
Scalability — Can this channel sustain growth at the volume you need?
Magic Number (S&M efficiency)
Addressable volume (TAM of channel)
Saturation risk (diminishing returns)
CAC trend (increasing, stable, decreasing)
Strategic Fit — Does this channel align with your go-to-market strategy?
Customer segment match (SMB vs. enterprise)
Sales motion compatibility (PLG vs. sales-led)
Brand positioning alignment
Decision Matrix
LTV:CAC
Payback
Customer Quality
Scalability
Decision
>3:1
<12mo
Good retention
High volume
Scale aggressively
2-3:1
12-18mo
Average retention
Medium volume
Test & optimize
<2:1
>18mo
Poor retention
Low volume
Kill or fix
Anti-Patterns (What This Is NOT)
Not vanity metrics: "We got 10,000 signups!" means nothing if they churn in 30 days
Not CAC-only thinking: Low CAC with terrible retention is worse than high CAC with great retention
Not ignoring payback: 5:1 LTV:CAC with 36-month payback is a cash trap
Not scaling broken channels: Pouring money into inefficient channels accelerates failure
When to Use This Framework
Use this when:
Evaluating whether to scale a new channel (content, paid, events, etc.)
Deciding how to allocate marketing budget across channels
Assessing whether to kill an underperforming channel
Comparing channels to optimize ROI
Planning annual marketing budget allocation
Don't use this when:
Channel is brand-new (<3 months, <100 customers) — not enough data
You're testing channel fit (this is for evaluation, not experimentation)
Strategic channels (e.g., enterprises require field sales regardless of CAC)
You don't have channel-level data (need to track CAC, retention by source)
[Market positioning: e.g., "Need to be present in this channel for credibility"]
How to manage:
Cap spend — Don't scale until economics improve
Current: $___/month
Cap at: $___/month (hold steady)
Track leading indicators — Don't just look at short-term CAC/LTV
Pipeline influence
Brand awareness lift
Referral rate from this channel
Re-evaluate quarterly
If economics improve (LTV:CAC >3:1): scale
If economics stay poor: reconsider strategy
Timeline:
Give it [6-12 months] to show results
If no improvement: kill or reduce drastically
Risk: You're subsidizing growth. Make sure it's worth it."
Step 5: Compare Across Channels (Optional)
If user has multiple channels, agent can generate:
Channel
CAC
LTV
LTV:CAC
Payback
Magic Number
Quality
Recommendation
Google Ads
$500
$2,000
4:1
8mo
0.9
High
Scale
Content
$200
$1,500
7.5:1
4mo
1.2
High
Scale
Outbound
$10K
$50K
5:1
18mo
0.6
Medium
Optimize
Events
$15K
$30K
2:1
24mo
0.3
Low
Kill
Budget allocation recommendation:
Scale: Content (highest efficiency)
Scale: Google Ads (strong economics)
Optimize: Outbound (improve magic number)
Kill: Events (reallocate budget)
Examples
See examples/ folder for sample conversation flows. Mini examples below:
Example 1: Scale (Content Marketing)
Channel: Organic content (blog, SEO)
CAC: $200
LTV: $3,000
LTV:CAC: 15:1
Payback: 3 months
Magic Number: 1.8
Customer quality: High (lower churn, higher NRR)
Recommendation: Scale aggressively. Exceptional unit economics, fast payback, high-quality customers. Increase content spend 2-3x.
Example 2: Optimize (Paid Search)
Channel: Google Ads
CAC: $800
LTV: $2,000
LTV:CAC: 2.5:1
Payback: 14 months
Magic Number: 0.6
Customer quality: Lower (higher churn in first 90 days)
Recommendation: Test & optimize before scaling. CAC is high, onboarding is weak for this segment. Improve landing page, target higher-intent keywords, better onboarding for paid customers.
Example 3: Kill (Trade Shows)
Channel: Industry events
CAC: $20,000
LTV: $30,000
LTV:CAC: 1.5:1
Payback: 30 months
Magic Number: 0.2
Customer quality: Low (off-ICP, many tire-kickers)
Recommendation: Kill. CAC too high, payback too long, poor customer quality. Reallocate budget to content and paid search.
Common Pitfalls
Pitfall 1: Scaling Broken Channels
Symptom: "Let's 10x our Google Ads spend!" (LTV:CAC is 1.5:1)
Consequence: You accelerate cash burn without improving unit economics. Lose money faster.
Fix: Only scale channels with LTV:CAC >3:1 and payback <12 months. Fix broken channels before scaling.
Pitfall 2: Ignoring Customer Quality
Symptom: "CAC is only $100!" (but customers churn in 30 days)
Consequence: Low CAC means nothing if LTV is also low. You're acquiring churners, not customers.
Fix: Track cohort retention and NRR by channel. Low CAC + high churn = bad channel.
Pitfall 3: Celebrating Vanity Metrics
Symptom: "We got 10,000 signups from this campaign!" (5% convert to paid)
Consequence: Signups don't pay bills. CAC is calculated on paid customers, not signups.
Fix: Track CAC on paid customers only. Ignore vanity metrics like signups, impressions, clicks.
Pitfall 4: Averaging Across Channels
Symptom: "Blended CAC is $500" (but hiding that one channel is $10K CAC)
Consequence: Bad channels hide in blended metrics. You don't know which channels to kill.
Fix: Track CAC, LTV, payback by channel. Compare channels individually.