Analyzing Single Customer Cash Flow is more important than your CAC Payback Period.
While CAC Payback Period is a critical metric for companies to evaluate their marketing performance, it misses how cash actually flows in and out of the business.
For example, if a lot of your customers pre-pay for annual plans, you can receive cash for two years by month 13. This cash can help you break even on your CAC much earlier.
While it is true that pre-payments for annual plans are to be recognized across all 12 months of the year, from a cash flow standpoint you break even on CAC much earlier.
The better you understand the cash flow break-even point, the more aggressive you can be with your marketing efforts.
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