Are you unsure of how well your marketing is performing? Worried that your B2B marketing budget is going nowhere?
As you build a sophisticated marketing engine, a CAC Payback Period should be guiding your B2B marketing budget decision-making.
There are many ways you can measure your marketing ROI. While the CAC payback period is a more long term and complex metric, it’s a vital way to ensure the health and growth of your company.
What is the CAC Calculation?
Firstly, let’s go over what “CAC” stands for and why it matters.
CAC, Customer Acquisition Cost, is a calculation used by marketing leaders to ensure that their marketing is getting the ROI (Return On Investment) that they desire.
What is a CAC payback period?
The CAC payback period (sometimes referred to as the “months to recover CAC”) is the number of months it will take to recover the cost of acquiring a customer. As a demand transformation agency, it’s our responsibility to keep this period as short as possible to help your company grow.
How Long Should Your CAC Payback Period Be?
The typical benchmark for a startup to recover CAC should be around 12 months. The most high-performing ones may reach somewhere around 6 months. The larger the enterprise, the quicker the CAC period because of their access to capital and resources.
The CAC rule of thumb for your B2B marketing budget should be the shorter the better!
There are other data points to consider when gauging the success of your marketing in relation to the company’s financial viability:
- Customer types
- Revenue concentration
- Billing cycles
- Working capital spending needs
Need Help Reducing Your CAC Payback Period?
As the CAC payback period demonstrates, mistakes made in marketing can be costly and detrimental to your business. If your B2B needs help strategizing, get in touch – we will be happy to help! As a demand generation marketing agency, we know how to audit, strategize, and measure marketing efforts for all industries in B2B and companies of all sizes.
Contact us today to start seeing results.