Why CAC Ratios Could Be Healthtech Marketing Leaders Secret Weapon

Healthcare technology marketing leaders face increasing pressure to justify their budgets while driving measurable results. When it comes to setting budgets, traditional approaches of allocating a percentage of revenue to marketing are proving insufficient for today’s data-driven executives and boards.

The latest analysis from Ray Rike and Benchmarkit is a must-read for marketing leaders. His research provides compelling evidence that Customer Acquisition Cost (CAC) ratios offer a more sophisticated, defensible framework for budget planning. This is especially valuable for health tech companies, which typically have higher acquisition costs and longer sales cycles.

Trust me on this. You want to understand this approach!

The Problem with Traditional Budget Benchmarks

While percentage-of-revenue benchmarks offer a starting reference point, they fail to provide actionable insights on expected outcomes or consider the unique aspects of healthtech sales cycles. According to data compiled from various sources that we covered in an earlier post:

• Gartner reports average marketing spending increased from 6.4% to 9.5% of company revenue across industries, with tech product CMOs specifically increasing budgets from 5% to 10.1% year-over-year
• BDC suggests B2B companies allocate 2-5% of revenue to marketing
• HubSpot indicates B2B product industries average 7.8% of revenue on marketing
• The CMO Council reports B2B companies spend approximately 7.5% of revenue on marketing

However, as many healthtech marketing leaders have experienced, these percentages don’t adequately account for the complex, longer-cycle, multi-stakeholder nature of healthcare technology purchasing decisions. CFOs dismiss this type of data too easily.

The problem is that investors and the C-suite often have unrealistic and flawed expectations of how long payback will take. CAC ratios may help them change their mental model of sales and marketing as investments.

The Rise of CAC Ratios as Budget Drivers

In an earlier post we covered CAC ratios in detail. The CAC ratio compares the cost of acquiring new customers to the revenue they represent for you.

For example, if the CAC ratio is 1.5 and your average new customer deal has annual recurring revenue (ARR) of $100,000, acquiring each new customer will cost you $150,000 in sales, marketing, and other expenses allocated to new customer acquisition.

Let’s assume that customers churn every five years. Then, your lifetime value is $500,000. The acquisition cost is $150,000; the combined sales and marketing ROI is 3.3X.

Ray Rike’s 2025 B2B SaaS Marketing Benchmarks research provides a more sophisticated approach through CAC ratios. These ratios measure the relationship between customer acquisition investments and the resulting revenue, creating a direct link between spending and outcomes.

Why CAC Ratios Matter More Than Percentage-Based Budgeting

1. Data-driven justification: CAC ratios ground budget requests in historical performance data rather than industry averages
2. Direct connection to revenue: They create clear connections between marketing investments and revenue outcomes
3. Competitive benchmarking: They allow comparison against industry peers without revealing absolute spending numbers
4. Forward-looking planning: They enable more accurate forecasting based on acquisition targets

Healthtech-Specific CAC Ratio Benchmarks for 2025

Rike’s research reveals particularly valuable insights for healthtech companies, which typically fall into the higher contract value segments:

• For healthtech solutions with annual contracts of $50,000-$100,000, the median CAC ratio is 2.30
• For enterprise healthcare solutions exceeding $100,000 per year, the median CAC ratio is 1.94
• Vertical-specific solutions (common in healthcare) have a median CAC ratio of 1.49

This means that for every dollar of new annual recurring revenue (ARR) from a $250,000 enterprise healthcare contract, companies should expect to invest approximately $1.94 in combined sales and marketing expenses.

Healthcare Buying Sales Cycles Require Special Consideration

Healthcare technology sales cycles frequently extend beyond 12 months, creating unique budgeting challenges. Rike recommends analyzing CAC ratios over 5-quarter or 9-quarter periods to understand true acquisition costs.

For example, if your organization is targeting $5 million in new ARR from healthcare enterprise clients in 2026, with an average 5-quarter sales cycle and a CAC ratio of 1.94:

1. Calculate total acquisition investment: $5,000,000 × 1.94 = $9,700,000
2. Adjust for the sales cycle: ($9,700,000/5) × 4 = $7,760,000 needed in the current fiscal year
3. Allocate between sales and marketing: If sales is budgeted at $3,000,000, marketing would require $4,760,000

This approach acknowledges that investments made today will drive revenue that materializes over varying timeframes, something percentage-based models fail to capture.

Real-World Application for Healthtech Companies

The budget challenges reported by healthtech marketing leaders in our Healthtech Marketing Network align with these findings. Many reported 2023-2024 budget cuts ranging from moderate trims to reductions of 50% or more, with most expecting flat budgets for 2025 despite growth expectations.

This is deeply frustrating As one healthtech marketing leader stated,

“You can cut for profitability, but you can’t cut for growth.”

CAC ratios could provide the evidence needed to defend growth-oriented marketing investments.

Measuring ROI Beyond the Initial Sale

For healthtech companies, the lifetime value calculation is particularly important given the potential for long-term customer relationships. If your average customer remains for five years, a $5 million investment in new ARR represents $25 million in lifetime value – a 5× ROI for marketing and 2.5× ROI for combined sales and marketing.

This calculation provides compelling justification for marketing investments, especially when compared to other corporate investment options.

Arguably, lifetime values are even more important in healthcare, as average customer lifetimes frequently last more than five years.

Strategic Budget Allocation Framework

When applying CAC ratios to your 2025 planning, consider allocating your budget across these three categories:

1. Foundation investments – Essential infrastructure, including CRM, marketing automation, intent data, and compliance tools
2. Proven growth engines – Reliable lead generation channels like targeted paid media,  high-value events, and ABM programs with demonstrated pipeline contribution
3. Strategic experiments – New approaches with the potential to transform performance, such as AI-driven personalization, niche thought leadership or targeted field marketing

For healthtech marketers selling solutions with $250,000+ ACVs, Rike’s research suggests allocating approximately:

• 29% to demand generation programs
• 29% to strategic events
• 9% to content marketing
• 7% to communications
• The remainder to specialized initiatives like channel marketing and product marketing

The Challenge of Marketing Attribution in Healthtech

The CAC ratio model implicitly addresses healthcare technology’s most persistent challenges: accurate attribution across complex buying cycles. As reported in our discussions with healthtech marketing leaders, most struggle with attribution beyond basic pipeline contribution metrics.

While softer metrics like website visits and engagement receive some attention, pipeline dollars and revenue impact remain the most compelling KPIs. The CAC ratio framework acknowledges both marketing and sales contributions without requiring perfect attribution models, making it particularly valuable in the healthcare ecosystem.

CAC Ratios May Be A More Defensible Approach to Budget Planning

As healthtech marketers plan for the future, moving beyond simple percentage-based benchmarks to CAC ratio analysis provides several advantages:

1. It establishes a data-driven foundation for budget requests
2. It creates clear line-of-sight between investments and expected outcomes
3. It accounts for the unique aspects of healthcare technology sales cycles
4. It provides language that resonates with CEOs, CFOs and investors

By integrating CAC ratio benchmarks into your budget planning process, you’ll be positioned to make more compelling cases for marketing investments that fuel sustainable growth, even in challenging economic environments.

As the healthcare technology landscape continues evolving, the companies that understand and effectively communicate their customer acquisition economics will maintain a competitive advantage in both the marketplace and the boardroom.

If you liked this post and want to learn more…

1. Check out more posts like this in the Healthtech MarketingLearning Center. It is chock-full of articles, use cases, how-to’s, and ideas to get you started on your ABM journey. This post on B2B marketing budget  benchmarks will be especially useful for anyone planning for 2024.
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