How To Calculate CAC Payback in Blackbaud | Arithmix

Calculating CAC Payback is an essential part of any business strategy. It helps you determine the amount of time it takes for your company to recover the cost of acquiring a new customer. In this article, we will discuss what CAC Payback is, when it is valuable to calculate it, and how to calculate it.

What Is CAC Payback?

CAC Payback is the amount of time it takes for a company to recover the cost of acquiring a new customer. It is calculated by dividing the cost of acquiring a customer by the revenue generated by that customer over a specific period. The result is the number of months it takes for the company to recover the cost of acquiring that customer.

For example, if the cost of acquiring a customer is $100 and the revenue generated by that customer over a year is $1200, the CAC Payback would be 1 month. This means that it would take one month for the company to recover the cost of acquiring that customer.

When Is It Valuable To Calculate CAC Payback?

Calculating CAC Payback is valuable for any company that wants to understand the return on investment (ROI) of its customer acquisition efforts. It helps companies determine the effectiveness of their marketing and sales strategies and identify areas for improvement.

For example, if a company is spending a significant amount of money on advertising and not seeing a return on investment, calculating CAC Payback can help identify the problem. If the CAC Payback is too high, it may indicate that the company needs to adjust its marketing and sales strategies to acquire customers more efficiently.

How To Calculate CAC Payback

To calculate CAC Payback, you need to know the cost of acquiring a customer and the revenue generated by that customer over a specific period. The period can be a month, a quarter, or a year, depending on the company's preference.

Here is the formula to calculate CAC Payback:

CAC Payback = Cost of Acquiring a Customer / Revenue Generated by that Customer over a Specific Period

For example, if the cost of acquiring a customer is $100 and the revenue generated by that customer over a year is $1200, the CAC Payback would be:

CAC Payback = $100 / $1200 = 0.083 or approximately 1 month

Once you have calculated the CAC Payback, you can use this information to make informed decisions about your marketing and sales strategies. If the CAC Payback is too high, you may need to adjust your strategies to acquire customers more efficiently.

In conclusion, calculating CAC Payback is an essential part of any business strategy. It helps companies understand the return on investment of their customer acquisition efforts and identify areas for improvement. By following the steps outlined in this article, you can calculate CAC Payback for your company and use this information to make informed decisions about your marketing and sales strategies.

How Do You Calculate CAC Payback in Blackbaud

Blackbaud itself isn’t naturally geared towards letting you calculate complex metrics like CAC Payback. As an alternative, teams typically use products like Arithmix to import data from Blackbaud and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Blackbaud, combine it with data from other systems, and create calculations like CAC Payback.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating CAC Payback in Arithmix

Calculating metrics like CAC Payback is simple in Arithmix. Once you've created your free account, you’ll be able to import your Blackbaud data, and use it to create natural language formulas for metrics like CAC Payback.

Arithmix is designed to give you the power to build any calculations you want on top of your Blackbaud data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.