How To Calculate CAC Payback in Deltek | Arithmix

Calculating CAC payback is an important metric for any business looking to measure the effectiveness of their marketing and sales efforts. It helps you determine how long it takes for a customer to generate enough revenue to cover the cost of acquiring them. In this article, we'll explore what CAC payback is, when it's valuable to calculate it, and how to calculate it.

What Is CAC Payback?

CAC payback is the amount of time it takes for a customer to generate enough revenue to cover the cost of acquiring them. CAC stands for customer acquisition cost, which includes all the expenses associated with acquiring a new customer, such as marketing and sales costs. The CAC payback period is a measure of how quickly a business can recoup its investment in acquiring new customers.

For example, if a business spends $1,000 on marketing and sales to acquire a new customer, and that customer generates $1,500 in revenue, the CAC payback period would be 0.67 (i.e., $1,000 ÷ $1,500). This means that it takes 0.67 of a customer's lifetime value to cover the cost of acquiring them.

When Is It Valuable To Calculate CAC Payback?

Calculating CAC payback is valuable for businesses of all sizes, but it's particularly important for startups and businesses that are looking to grow quickly. By measuring the CAC payback period, you can determine whether your marketing and sales efforts are generating enough revenue to cover their costs. This can help you make informed decisions about where to invest your resources and how to optimize your marketing and sales strategies.

Additionally, calculating CAC payback can help you identify areas where you can reduce costs and improve efficiency. For example, if you find that your CAC payback period is longer than you expected, you may need to re-evaluate your marketing and sales strategies to find ways to acquire customers more efficiently.

How To Calculate CAC Payback

To calculate CAC payback, you need to know your customer acquisition cost (CAC) and your customer lifetime value (CLV). CAC is the total cost of acquiring a new customer, including all marketing and sales expenses. CLV is the total revenue that a customer generates over their lifetime with your business.

Once you have these two numbers, you can calculate CAC payback by dividing CAC by CLV. For example, if your CAC is $1,000 and your CLV is $1,500, your CAC payback period would be 0.67 (i.e., $1,000 ÷ $1,500).

It's important to note that CAC payback is not a one-time calculation. You should regularly monitor your CAC payback period to ensure that your marketing and sales efforts are generating enough revenue to cover their costs. If you find that your CAC payback period is increasing over time, it may be a sign that you need to adjust your strategies to improve efficiency and reduce costs.

Conclusion

Calculating CAC payback is an important metric for any business looking to measure the effectiveness of their marketing and sales efforts. By understanding your CAC payback period, you can make informed decisions about where to invest your resources and how to optimize your marketing and sales strategies. Remember to regularly monitor your CAC payback period to ensure that your efforts are generating enough revenue to cover their costs.

How Do You Calculate CAC Payback in Deltek

Deltek 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 Deltek 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 Deltek, 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 Deltek 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 Deltek 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.