Navigator
Startup
Customer Acquisition

Customer Acquisition by Vertical/Segment: Not All Customers Are Equal

Why your SMB CAC is 10x lower than Enterprise—and how to optimize acquisition by customer type.

• Navigator Team
segmentation vertical SMB enterprise acquisition strategy

Your company sells to SMB and Enterprise customers.

Your overall CAC is $1,500.

But when you segment:

  • SMB CAC: $200
  • Enterprise CAC: $5,000

These are completely different acquisition challenges.

For SMB, you’re selling a product. For Enterprise, you’re selling a relationship.

Most founders mix these together and make bad decisions.

Why CAC Differs by Segment

SMB (1-50 employees):

Acquisition model: Self-serve or low-touch sales

  • Customer finds you through ad, organic search, word of mouth
  • They try the product
  • They decide to buy

Time to close: Days to weeks Cost: Minimal (mostly ad spend) CAC: $100-500

Mid-Market (50-500 employees):

Acquisition model: Sales-driven but efficient

  • You find them or they find you
  • One sales rep has initial conversation
  • They evaluate for 2-4 weeks
  • They decide to buy

Time to close: 4-8 weeks Cost: Moderate (ad spend + sales rep time) CAC: $1,000-3,000

Enterprise (500+ employees):

Acquisition model: Full sales motion

  • You hunt them actively
  • Multiple sales conversations (exec, technical, procurement, legal)
  • Evaluation period: 2-3 months
  • Deal negotiations: Multiple proposals, discounts, customizations

Time to close: 3-6 months Cost: High (sales rep time, custom demos, travel, legal review) CAC: $5,000-25,000

The difference isn’t that one is easier. It’s that they’re fundamentally different sales models.

How to Segment Your CAC

Step 1: Define your segments

Typical segments:

  • By company size (SMB, Mid, Enterprise)
  • By industry (Healthcare, Finance, Retail, etc.)
  • By product tier (Free, Starter, Pro, Enterprise)
  • By geography (US, Europe, Asia)
  • By use case (single-user, team, company-wide)

Step 2: Track acquisition cost by segment

For each segment, track:

  • Total customers acquired this quarter
  • Total spend (marketing + sales blended) for this segment
  • CAC for segment = Total spend / Total customers

Example:

SMB Segment (Q1 2024):

  • Customers acquired: 50
  • Marketing spend: $5,000
  • Sales spend (allocated): $5,000
  • Total: $10,000
  • CAC: $10,000 / 50 = $200

Enterprise Segment (Q1 2024):

  • Customers acquired: 2
  • Marketing spend: $2,000
  • Sales spend (allocated): $8,000
  • Total: $10,000
  • CAC: $10,000 / 2 = $5,000

Notice: Same total spend ($10k), very different CAC ($200 vs $5,000).

This is why “average CAC” ($10,000 / 52 = $192) is misleading. Your actual CACs are $200 and $5,000.

Step 3: Calculate LTV:CAC ratio by segment

SMB:

  • LTV: $2,000 (small annual contract, 2-year retention)
  • CAC: $200
  • Ratio: 10:1 (excellent)

Enterprise:

  • LTV: $50,000 (large annual contract, 3-year retention, expansion revenue)
  • CAC: $5,000
  • Ratio: 10:1 (also excellent, but for different reasons)

Both segments can be profitable. The key is matching CAC to the business model.

The Segmentation Decision: Which Segments to Go After

Once you know your CAC by segment, you can make strategic decisions.

Scenario 1: SMB is profitable, Enterprise is not

  • SMB CAC: $200, LTV: $2,000, ratio 10:1
  • Enterprise CAC: $5,000, LTV: $15,000, ratio 3:1

Enterprise requires more sales effort but you’re not capturing enough value to justify it.

Decision: Double down on SMB. Fire the enterprise sales team. Invest in self-serve and product-led growth.

Scenario 2: Enterprise is profitable, SMB is struggling

  • SMB CAC: $500, LTV: $1,000, ratio 2:1
  • Enterprise CAC: $5,000, LTV: $50,000, ratio 10:1

Enterprise is much more profitable. SMB has poor unit economics.

Decision: Exit SMB. Shift all efforts to Enterprise. Raise prices so SMB isn’t your target.

Scenario 3: Both are profitable, but SMB scales faster

  • SMB CAC: $200, LTV: $2,000, ratio 10:1, payback period: 1 month
  • Enterprise CAC: $5,000, LTV: $50,000, ratio 10:1, payback period: 3 months

Both are equally profitable long-term. But SMB has much faster cash payback.

Decision: If cash-constrained, focus on SMB (faster payback = can reinvest sooner). If well-funded, do both.

The Trap: Mixed-Go-To-Market

Many startups accidentally try to serve all segments with one sales approach.

  • They have ads that appeal to SMB
  • But also a sales team trying to close Enterprise
  • SMB converts fast but is less lucrative
  • Enterprise takes forever but is worth more

Sales team gets frustrated because SMB is “too small.” SMB gets frustrated because sales team ignores them.

Result: Both segments underperform.

Better approach: Separate go-to-market for each segment.

  • SMB: Self-serve product, ads, product-led growth
  • Enterprise: Sales-driven, account executives, custom demos

Each segment has a dedicated team and process.

Vertical-Specific CAC

Beyond company size, CAC varies by industry.

Healthcare SaaS:

  • Regulatory requirements (compliance, certification)
  • Longer sales cycles (3-6 months typical)
  • Higher risk (healthcare liability)
  • CAC: High ($5,000-15,000+)

Finance SaaS:

  • Regulatory requirements (audits, compliance)
  • Slower decision-making (committee approvals)
  • High switching cost (changing systems is expensive)
  • CAC: High ($3,000-10,000+)

Retail SaaS:

  • Price-sensitive (lower budgets)
  • Faster decision (one person can approve)
  • High volume, low margin
  • CAC: Low ($500-1,500)

Construction SaaS:

  • Moderate price sensitivity
  • Moderate decision-making time
  • Industry-specific knowledge required
  • CAC: Moderate ($1,000-3,000)

If you’re comparing yourself to “SaaS benchmarks” for CAC, but you’re in healthcare and the benchmark is for retail, the comparison is useless.

Benchmark against companies in your vertical.

When to Expand to a New Segment

Most founders want to expand: “We’ve dominated SMB. Now let’s go after Enterprise.”

But this requires a different sales model, different product features, different pricing.

It’s essentially building a new business.

Before expanding, ask:

1. Do we have proof of product-market fit in the current segment?

If your SMB CAC is still high ($1,000+), you don’t have PMF yet. Expanding won’t help.

2. Can we serve the new segment profitably?

Estimate Enterprise CAC. If LTV:CAC ratio is 3:1 (enterprise’s LTV is only 3x its CAC), the math barely works. Is it worth the effort?

3. Do we have the resources?

Enterprise requires enterprise sales people, custom implementation, ongoing support. Do you have the budget?

4. Does the new segment make us better at the current segment?

Sometimes yes: Entering enterprise forces you to build more robust product, which SMB also benefits from.

Sometimes no: Custom features for enterprise complicate product for SMB.

Think carefully about the interaction.

The Takeaway

Your CAC is not a single number. It varies dramatically by segment.

Calculate it separately for each segment. Some will be profitable. Some won’t.

Focus on profitable segments. If a segment isn’t profitable, either fix it or exit it.

Don’t try to serve all segments the same way. SMB and Enterprise need different go-to-market strategies.

We help you segment your CAC, understand profitability by segment, and make strategic decisions about which segments to pursue.