Customer Acquisition Costs (CAC) are expenses to acquire customers. CAC payback is how long it takes to recoup the CAC, but it's a complex metric with no universal framework.
This is the single best measure of efficiency of your go-to-market engine. The recommended formula is: - CAC Payback = (Sales & Marketing Expenses in Period) / (Net New MRR Acquired in Period * Gross Margin) - MRR figure should include net new MRR - Measure & make improvements.
Continually experiment to optimize by: - Leveraging PLG best practices - Nailing product / market fit - Driving funnel efficiencies - Optimizing conversion rates Retention is also powerful: - Take advantage of upsell & cross-sell - Avoid the lifetime value trap - Finally, don't forget about your margins! Bottom Line: Faster Payback = Stronger Company