Your CAC is higher than you think

Hey there, it’s Patrick from TVG.

I hope you are staying warm! Dallas is currently an ice rink, Texas can’t function with a couple inches of snow.

Anyways…

I was on a call last week with a supplement brand doing $1.5M+ in annual revenue.

Their Meta ads looked incredible on paper. 4.3x ROAS. $10 cost per purchase. The numbers were screaming success.

But when I dug into their audience segments, I found the problem:

They did not have their Audience Segments setup (see image below).

We went ahead and helped them setup their audience segments.

And what we identified:

They were retargeting their own audience instead of acquiring new customers.

Here's what that means: their $10 cost per purchase wasn't actually acquiring anyone new.

It was just recycling money through people who already knew, liked, and trusted them. People who were probably going to buy anyway through email or SMS.

The real cost to acquire a new customer? Probably 3-4x higher. And they had no idea.

This is the Andromeda problem nobody's talking about.

Meta's algorithm is so good at finding your existing customers that if you don't explicitly tell it who your customers are and exclude them, it might spend majority of your budget retargeting them instead of going after net new people.

It looks amazing on the dashboard. But it's not growing your business.

Here's what we found:

When we looked at their audience segments, it showed "all unknown" because they didn't have their customer list integrated with Meta. No Klaviyo sync. No customer exclusions. No audience segmentation.

So Meta was just guessing. And it was guessing wrong, spending money on the easiest targets (people who already bought) instead of finding new customers.

The fix is simple, but most agencies miss it:

1. Sync your customer list to Meta (via Klaviyo or a custom audience)

2. Exclude your existing customers from your acquisition campaigns (start with 30D Purchasers, then slowly expand to colder audiences)

3. Set up audience segments so you can see exactly where your spend is going

4. Rebalance your budget to 80-90% new customer acquisition, 10-20% existing customer retargeting

Once you do this, your ROAS will probably drop.

Your cost per purchase will go up.

And that's actually a good sign, it means you're finally acquiring new customers instead of just recycling existing ones.

The brands that understand this are the ones that actually grow.

The ones that don't? They hit a ceiling fast.

Because you can only retarget your existing audience so many times before they stop buying.

If you're doing $1M+ in revenue and you're not crystal clear on how much of your ad spend is going to new customers vs. existing customers, you're probably wasting money.

Book a free CORE Growth Audit with us.

We'll audit your entire ad account: Meta, Google, the whole stack.

We'll show you exactly where your spend is going and what your real customer acquisition cost actually is.

Then we'll map out a strategy to fix it.

The audit is valued at $3,000 of our team’s time.

But we only do 5 per week, and we're opening spots this week.

If you want to see what's actually happening in your business, apply here:

APPLY FOR AUDIT

Talk soon,

Patrick O’Driscoll