CAC and Full Payback Period

Written By David Maxey

If rates are up, cheap capital is out. Your GTM has to fund itself. That means knowing three things cold: CAC, full payback period, and lifetime value

Why this matters now

When borrowing gets expensive, sloppy growth hurts twice. You cannot bank on the next round. You need CAC under control, full payback inside a window you can live with, and LTV that clears the bar with room to spare

Define it the way finance will

CAC

All-in cost to acquire a customer. Include media, programs, tools, people, and a fair slice of shared GTM costs

Full payback period

Months to recover CAC plus the average cost to serve. That includes Customer Success headcount, CS software, support marketing, and a reasonable allocation of R&D and G&A. Some teams only include a portion of R&D and G&A. Be explicit and be consistent

Lifetime value (LTV)

Gross margin dollars over the life of the customer. Track it at the customer level and roll it up by cohort, anchored on contract start or real product usage start

The spread between LTV and your full payback period return is your profit pool after smaller ancillary costs. If you do not include cost to serve, your model will lie to you

Dashboards that people use

Reports do nothing without owners. Build dashboards with the people who run the work and keep the metrics in front of them daily

  • CAC by channel, by rep, and by cohort

  • Full payback period trend lines and distribution

  • LTV by cohort with renewal rate and gross margin assumptions called out

What to do when numbers move:

  • CAC spikes

    Rebalance channel mix, fix routing and scoring, review offer and pricing

  • Payback stretches

    Audit onboarding, adoption, and retention motions. Improve time to value. Check discount creep and CS coverage

  • LTV drifts

    Stop using one-size estimates. Use realized payments by cohort and align forecasting to contract terms and customer type

Wildly different payment schedules and prices across segments will break simple LTV math. Cohorts keep you honest

Comp that points people at the right work

Tie incentives to metrics people can actually move and make the plan teachable and predictable

  • Incentivize the metric they truly impact and close loopholes that fight company goals

  • Make sure they know how to move that metric with clear plays and ownership

  • Make payout math obvious so people can forecast their own earnings

What to track every month

  • CAC by rep and by acquisition cohort

  • Full payback period with the cost to serve included

  • LTV by cohort and whether your forecast method matches your revenue model

  • Profitability signals from the spread between LTV and payback

  • Comp alignment to the metrics each team moves

Get these right and you get a business that grows without praying for cheaper money.

David Maxey
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