Customer acquisition is getting harder.
E-commerce growth has slowed, consumer confidence remains under pressure and businesses are having to work much harder to justify where every pound of marketing budget goes.
So what does profitable growth look like when acquiring the next customer is becoming increasingly expensive?
In this episode of The Fractional CFO Show, Adam Cooper is joined by Daniel Dunn, CEO and Co-Founder of Paper Planes, a growth agency and technology platform helping D2C and e-commerce brands use data-driven postal marketing to acquire, retain and reactivate customers.
Dan's background spans Disney, data and insights consultancy dunnhumby, Tesco Clubcard strategy and managing major brand marketing investment before co-founding Paper Planes.
That experience gives him an interesting perspective on one of the biggest challenges facing founders today: balancing customer acquisition and business growth with profitability and return on investment.
The changing economics of customer acquisition
Dan explains why the environment for e-commerce and D2C brands has changed significantly since the growth experienced during the pandemic.
For years, businesses could increase marketing spend across channels such as Meta, Google and paid social and see relatively predictable growth.
Today, that equation is becoming more difficult.
Customer acquisition costs are under pressure, consumers have more choice and founders need a much clearer understanding of which marketing activity is genuinely creating incremental growth.
That means moving beyond top-line revenue and asking better questions about marketing ROI, profitability and where the next pound of investment should go.
Marketing needs both creativity and data
One of the central themes of the conversation is Dan's view that marketing is both an art and a science.
Great creative still matters. Brands need campaigns that attract attention, communicate effectively and stand out in crowded markets.
But creativity needs to sit alongside data-driven decision-making.
For founders working with more limited budgets, understanding the return generated by different marketing channels becomes particularly important. The objective isn't simply to spend more. It's to understand what works, remove ineffective spend and continually improve how capital is allocated.
Acquisition versus customer retention
We also explore the increasing focus on customer retention and reactivation.
Businesses naturally spend a lot of time thinking about how to acquire new customers, but Dan argues that many overlook the value sitting within their existing first-party customer data.
Once a business has paid to acquire a customer, there is an opportunity to build that relationship, increase customer lifetime value and encourage repeat purchases rather than continually paying to replace them with someone new.
For founders focused on sustainable and profitable growth, the balance between acquisition and retention is becoming increasingly important.
Why diversification matters
Another major theme is marketing diversification.
Many growing businesses become heavily dependent on a relatively small number of channels, particularly Meta, Google, email and paid social.
That can work extremely well, until performance changes.
Dan's advice isn't to abandon successful channels. Instead, businesses should understand which parts of their existing marketing spend are generating the strongest returns and continually allocate a small proportion of budget towards testing something new.
His recommendation to founders is simple: every quarter, try a new channel.
Testing doesn't necessarily require a larger overall marketing budget. It can mean identifying ineffective expenditure, reallocating it and using controlled tests to understand whether another channel can deliver incremental returns.
Over time, that creates a more diversified and resilient customer acquisition strategy.
First-party data and direct mail
The conversation also challenges some assumptions around direct mail.
With hundreds of billions of emails being sent globally every day, getting attention through an inbox is increasingly difficult.
Dan explains how modern postal marketing has moved well beyond traditional batch-and-blast direct mail.
By combining first-party data, customer segmentation, marketing automation and personalised campaigns, physical mail can become another measurable channel within a wider customer acquisition and retention strategy.
The principle is broader than direct mail itself: founders should be prepared to test different routes to market rather than automatically allocating budget to the channels everyone else uses.
Growth, profitability and financial decision-making
From a financial perspective, this creates an important question.
When does marketing spend represent genuine investment in growth, and when are businesses simply buying increasingly expensive revenue?
For founders, CEOs and finance leaders, good marketing decision-making requires visibility beyond revenue alone.
Understanding customer acquisition costs, marketing ROI, retention, customer lifetime value and incremental returns can help businesses decide where growth investment makes commercial sense and where capital could be deployed more effectively elsewhere.
That becomes particularly important when economic conditions are difficult and cash, margins and profitability are under pressure.
Running an agency when clients expect more
Dan also shares his experience of building Paper Planes and how agency-client relationships are changing.
As technology makes it easier to start businesses and competition increases, clients have more alternatives and increasingly high expectations.
For agencies and other service-based businesses, delivering expertise alone may not be enough.
Dan talks about the importance of customer service, maintaining close relationships, understanding what clients actually need and creating a genuinely human experience, while still balancing the time and resources required to deliver that service profitably.
It's a challenge many agency founders will recognise: providing exceptional client service without allowing over-servicing to undermine client profitability.
Where AI genuinely changes the equation
We also discuss AI and where Dan believes it is creating genuine value rather than simply adding more hype.
For Dan, one of AI's biggest impacts is making information and data more accessible, much faster.
But access to information isn't the same as good judgement.
AI still needs quality data, experienced interpretation and human scrutiny if businesses are going to make good decisions from its outputs.
Dan also considers how differently he would build Paper Planes if he were starting again today.
His approach would be to stress-test what AI can achieve first, before deciding where additional people, technology, marketing investment or external support are genuinely required.
It's an interesting lens for any founder thinking about operational efficiency, resource planning and how to scale a business in an AI-enabled world.
In this episode, we discuss:
• The rising cost of customer acquisition
• Business growth versus profitability
• Marketing ROI and better investment decisions
• Data-driven marketing and measurement
• Customer retention and reactivation
• Customer lifetime value and first-party data
• Diversifying marketing channels
• Testing and learning with limited budgets
• Direct mail alongside digital marketing
• Agency profitability and client experience
• AI, automation and operational efficiency
• Building a more resilient growth strategy
If you're a founder, CEO, agency owner, e-commerce operator or finance leader trying to understand how to grow without simply throwing more money at customer acquisition, this episode offers a practical perspective on making marketing investment work harder.
Business Book Bonus
Dan recommends How to Make a Billion by Richard Harpin, drawing on Harpin's experience building businesses including HomeServe.
For something completely different, he also recommends The Rest Is History podcast as a way to switch off from business and maintain some balance.
About The Fractional CFO Show
The Fractional CFO Show, hosted by Adam Cooper of ACC Finance Solutions, features practical conversations with founders, CEOs and senior operators about the financial and commercial decisions behind building better businesses.
We explore business growth, profitability, cash flow, financial strategy, leadership, operational performance and the decisions founders face as their businesses scale.
Subscribe to The Fractional CFO Show on Spotify, Apple Podcasts or your preferred podcast platform for future episodes.
