Diagnose Rising CAC With Stable Conversion

Business Context

FinFlow is a B2B SaaS company selling expense management software to small businesses through paid search, paid social, affiliate, and outbound channels. Over the last 3 months, the CMO has flagged that customer acquisition cost (CAC) increased from $240 to $315 (+31%), while the overall website trial-to-paid conversion rate remained flat at 4.8%.

Metric Scenario

Monthly paid media spend rose from $480K to $630K, while new paying customers increased only from 2,000 to 2,050. Landing-page visit-to-trial conversion is stable at 12%, and trial-to-paid conversion is also stable at 40%, suggesting the lower-funnel experience has not materially changed. Leadership wants to know why CAC is rising despite stable conversion and what to investigate first before increasing budget further.

Requirements

1. Define CAC precisely for this business and specify what costs and customer counts should be included.
2. Break down the CAC increase into likely drivers across traffic quality, channel mix, auction dynamics, targeting, and sales/process changes.
3. Identify the first analyses you would run to determine whether the issue is due to higher media costs, lower lead volume efficiency, mix shift, or attribution/reporting changes.
4. Propose 3-5 hypotheses that could explain rising CAC with stable conversion rate.
5. Recommend concrete next steps and guardrail metrics to monitor.

Data Available

• ad_spend_daily: date, channel, campaign_id, impressions, clicks, spend, CPM, CPC, CTR
• web_funnel_events: user_id, session_id, source, campaign_id, landing_page, trial_started_at, paid_converted_at
• crm_leads: lead_id, company_size, industry, geo, sales_owner, opportunity_stage, closed_won_date
• attribution_log: user_id, first_touch_channel, last_touch_channel, attributed_revenue, attribution_model
• pricing_and_promos: date, offer_type, discount_percent, free_trial_length, region