CAC Payback Period measures how many months it takes a cohort of customers to produce enough Gross Profit to pay back the sales and marketing expenses it took to acquire those customers.
For monthly aggregation, new customers acquired in a month are compared to S&M expenses for the prior month, to account for the lag between sales and marketing activities and a customer producing revenue. For month y (e.g., January 2021):
For quarterly aggregation, the same formula is used but multiplied by 3 in order to express CAC payback in months. For annual aggregation, S&M from the same year is used the formula is multiplied by 12.