Competition-Deviation CAC Rule
Lower acquisition costs by choosing channels and tactics competitors overlook.
- Difficulty
- Moderate
- Time to result
- ~months to results
- Steps
- 5
- Confidence
- 94%
The Competition-Deviation CAC Rule treats widespread competitor adoption as evidence that a marketing tactic may be economically crowded. The team first calculates LTV-to-CAC performance, then maps which channels and plays competitors commonly use. Instead of automatically copying those plays, it searches for credible, underused alternatives where auction pressure, content saturation, or organizational competition is lower. A bounded experiment tests whether the alternative can attract suitable customers more efficiently. The decision is based on customer quality, acquisition cost, and margin rather than novelty alone. Successful experiments receive additional investment, while weak ones are stopped. The mechanism converts calculated non-consensus behavior into a possible cost advantage without requiring reckless bets.
Origin
Extracted from Marketing Against the Grain, where Kipp Bodnar and Kieran Flanagan connected a reported rise in CAC with crowded channels and consensus-driven marketing.
Core principles
- 01Crowded tactics carry an acquisition-cost premium.
- 02Competitor consensus is a warning signal, not automatic validation.
- 03Calculated differentiation can improve both margins and growth.
- 04Channel choices should be evaluated through LTV-to-CAC economics.
How to run it
- 1
Establish the economic baseline
Calculate acquisition cost, customer lifetime value, and margin for each major marketing channel. Identify where deteriorating CAC is putting the business under the most pressure.
Pro tip Separate blended CAC into channel-level and campaign-level figures wherever attribution permits.
Watch out A blended average can conceal both exceptional and severely inefficient channels.
- 2
Map competitive consensus
Document the channels, formats, and tactics that most direct competitors appear to use. Treat heavy convergence as a sign that prices or attention costs may be inflated.
Pro tip Look beyond visible campaigns to recurring formats, offers, and distribution patterns.
Watch out Do not assume a popular tactic is profitable merely because many competitors use it.
- 3
Find an underused alternative
Select a credible tactic that reaches the target audience but is not yet crowded by competitors. Define why the team believes it can create a distribution or trust advantage.
Pro tip Favor an approach that uses a distinctive capability, perspective, or creator already available to the business.
Watch out Being different without a plausible customer-acquisition mechanism is not a strategy.
- 4
Run a bounded test
Set a limited budget, duration, audience, and success threshold. Compare the experiment with the incumbent tactic using equivalent customer-quality criteria.
Pro tip Measure leading indicators early, but reserve the final decision for qualified pipeline or customer outcomes.
Watch out Do not scale based solely on impressions or engagement.
- 5
Reallocate by economics
Increase investment when the differentiated tactic produces stronger CAC, margin, or customer quality. Stop or revise it when the expected advantage does not materialize.
Pro tip Repeat the competitive scan because successful channels eventually attract more competition.
Watch out An underused channel can become saturated, eliminating its original advantage.
In the wild
A B2B software company finds that every close competitor is increasing search-ad spend while none publishes expert-led YouTube explainers. It assigns a knowledgeable operator to produce a focused video series and tracks viewers through qualified trials. After a bounded test, the company compares customer quality and CAC with paid search before reallocating part of the budget.
→ The company builds an owned audience and reduces dependence on an increasingly expensive auction.
Common mistakes
Copying competitors by default
A competitor's visible tactic may be expensive, unprofitable, or supported by economics that do not apply to your business.
Confusing novelty with advantage
A different tactic still needs a credible path to distribution, customer value, and measurable acquisition.
Ignoring customer quality
A low headline CAC is misleading if the new channel attracts customers with poor retention or lifetime value.
Is it for you?
Best for
It is best for growth teams with measurable unit economics and permission to test differentiated marketing approaches.
Not ideal for
It is not ideal for teams that cannot attribute acquisition outcomes or tolerate controlled experimentation.
From the transcript
“if you are doing what your competitors are doing you were paying over inflated prices your cost of customer acquisition is going to go up”
“if you're willing to take a little risk and deviate from what your competitors are doing then you can be successful your cost of customer…”
“the thing that we always hold ourselves accountable to or good marketers hold themselves accountable to is LTV to cost”
From the episode
The Biggest Marketing Mistake 99% Of Companies Make (#153)