Double Down on Top Growth Channels

Identify and scale the sources bringing you the most profitable new customers.

What this recipe is for

Finding which acquisition channels give you real, sustainable return—so you invest where new customers pay back and drive growth, not just where traffic looks shiny.

What you’ll get

A ranked view of your customer sources by true profitability

Clear spend allocation rules per channel

Tests to validate new channels without overcommitting

Early warning when a once-winning channel degrades

Key inputs

Customer Acquisition Cost (CAC) per channel

Customer Lifetime Value (LTV) or expected revenue per customer

Conversion rates by channel (traffic → customer)

Retention / repeat behavior by source

Gross margin per customer

Payback period expectations

Core logic

Not all traffic is equal. A channel that brings many customers but at too high a cost destroys value. Aim for LTV : CAC ≥ 3 : 1 per channel. Channels that meet or beat that threshold and scale cleanly become your primary growth engines. Lower-performing channels either need optimization or should be deprioritized.

Step-by-step actions

Step 1: Calculate channel-level economics

For each source, compute:

CAC (what you spend to get a customer)

LTV (what that customer is worth over time, adjusted for margin)

LTV : CAC ratio

Step 2: Rank channels

Prioritize channels where:

LTV : CAC ≥ 3 : 1

Payback period fits your cash flow needs

Customer quality (retention / upsell) is strong

Step 3: Improve weak but promising channels

If a channel has good volume but LTV : CAC < 3:1, test:

Better targeting or messaging to improve conversion

Adjust offer to increase initial value or retention

Reduce spend inefficiencies in the funnel

Step 4: Test new channels systematically

Start small with a controlled budget

Measure CAC, conversion, and early retention

Only scale if LTV : CAC approaches or exceeds 3 : 1 within expected payback

Step 5: Allocate and cap spend

Increase spend on top performers proportionally until marginal CAC starts to drift up.

Cap or pause spend on channels where performance deteriorates (rising CAC, falling retention, or weakening LTV).

Decision thresholds / guardrails

LTV : CAC < 3 : 1 on a scaled channel → Pause or optimize before investing more.

CAC rising faster than scale improvement → Assess saturation or creative fatigue; refresh or reduce.

Declining retention from a channel → Investigate quality drop (wrong audiences, onboarding issues).

New channel test fails to approach 3:1 within test window → Stop and reallocate to better-performing sources.

Examples

Local services:

Facebook ads delivering clients at $300 CAC with $1,000 LTV (3.3:1) are winners—scale. Referral partners delivering at $500 CAC with $900 LTV (1.8:1) need rework or deprioritization.

SaaS / subscription:

Organic search brings users with a 4:1 LTV:CAC and high retention—double down. Paid search shows a 2:1 ratio—optimize landing pages or adjust targeting before increasing spend.

Thinking checks

Are you tracking LTV and CAC separately per channel, not just overall?

Which channel gave the last profitable customer, and what changed?

If you increase spend in a top channel, does CAC stay within acceptable bounds?

Are new channels being tested with controlled risk and clear success criteria?

If the answer is no…

Channel isn’t profitable → Pause or lower spend; diagnose whether the issue is cost, conversion, or customer quality.

Top channels are degrading → Refresh creatives/offers or cap scaling to protect efficiency.

New channel bets aren’t paying off → Refine the test design or cut losses early.

What to track (minimum)

CAC by channel

LTV by source

LTV : CAC ratio per channel

Payback period

Retention / repeat rate from each source

Volume vs. efficiency trend over time

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