CAC (Customer Acquisition Cost)
Average SMB CAC payback is 6-12 months. Payback over 12 months correlates with 1.5-2x higher churn (Bain 2024).
💡TL;DR
CAC = spend / new customers. Payback period matters more than absolute CAC. SMBs have shorter LTV, so aim for payback under 12 months, ideally under 9. Break down ads, payroll, and tools, then optimize the top two monthly. Track CAC by channel, pause underperformers, and reallocate to winners.
Definition
Total sales and marketing spend divided by new customers gained in a period. It includes media, tools, payroll, agencies, and overhead allocated to acquisition. Teams track CAC alongside payback period and LTV to know whether growth is profitable.
🏢What This Means for SMB Teams
Smaller teams carry heavier per-person costs. Payback over 12 months is a red flag in SaaS. Measure ads and payroll separately.
📋Practical Example
A 30-person DTC skincare brand ($22M revenue) re-baselined CAC by channel. Before: average CAC was $148 with 14-month payback; paid social drove 52% of spend. They cut two low-ROAS audiences and shifted $80k/month to influencer bundles and email reactivation. After 90 days, blended CAC dropped to $112, payback shortened to 9.5 months, and monthly new customer volume rose 18%, improving gross margin by $210k per quarter.
🔧Implementation Steps
- 1
Separate CAC by channel and include payroll/tools allocated to acquisition.
- 2
Calculate payback months using gross margin, not revenue, to avoid false positives.
- 3
Pause or cap channels with payback >12 months; reallocate budget weekly.
- 4
Launch two cost-down tests per month (audience trim, creative refresh, landing speed).
- 5
Report CAC and payback with confidence intervals when volumes are small.
❓Frequently Asked Questions
Should we include sales salaries in CAC?
Yes, include variable and allocated base pay for acquisition roles. Excluding it understates payback and leads to overspending in SMBs where people cost dominates.
How do we handle small sample sizes?
Show ranges (e.g., ±15%) and use 4-week rolling averages. Make go/no-go calls on trends, not single-week spikes.
⚡How Optifai Uses This
Optifai calculates CAC and payback by channel weekly, recommending pauses for low-ROI plays.
📚References
- •
- •
Related Terms
Quota Attainment
Percentage of reps hitting or exceeding their sales quota in a given period. Often split by role, tenure, or territory to see where enablement or pipeline is lacking.
Revenue Per Rep
Total revenue (or ARR) generated divided by number of sales reps over a period. It captures productivity and reveals whether to hire, coach, or re-segment territories.
Average Deal Size
Total revenue from closed-won deals divided by number of deals in a period. Segmenting by industry, buyer size, and package highlights where value positioning or pricing needs refinement.
Conversion Rate (Sales)
The percentage of leads or opportunities that turn into closed-won deals. Commonly tracked by stage (demo→proposal→close) to locate the biggest drop-off and prioritize fixes. Consistent definitions of "SQL" and "opportunity" are essential.
Experience Revenue Action in Practice
Now that you know the terms, see them in action. Experience signal detection, automated actions, and ROI proof with Optifai.
Learn More