How many months of gross margin it takes to earn back what you spent to acquire a customer. It measures how fast acquisition spend turns back into cash.
When scaling paid acquisition, planning cash flow, comparing channels and making the case for budget to leadership.
SaaS teams targeting payback under 12 months; comparing paid social at 9 months to search at 4; cutting a channel whose payback outlasts average customer tenure.
Essential for subscription and repeat-purchase businesses, especially when cash is tight. Flagged when blended CAC hides a channel that never pays back.
