What is CAC Payback Period?

"The customer acquisition cost (CAC) payback period is the time it takes a business to recover its customer acquisition costs. Divide the CAC by the average monthly client revenue (ARPA). CAC payback is two months if CAC is $100 and ARPA is $50. Businesses use the CAC payback period to assess client acquisition efficiency. A shorter payback period means a business is acquiring clients at a cheaper cost and fast recovering its acquisition costs. A longer payback period may signal that the organization needs to rethink its sales and marketing strategy to cut expenses or boost client lifetime value. CAC payback duration only matters when compared to industry norms or company goals."