How to reduce the payback period?

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Successful companies reduce the return on investment period primarily by reducing the CAC. After a period of time, for example 3 to 5 years, a brand may have established its awareness, visibility, credibility, referral network, etc., which reduces the CAC.

For example, spending on SEO in the first three years can have a long-term impact for another three years, helping to reduce CAC and therefore payback periods.

On the other hand, over time, you can also strengthen the product, add features, etc. and increase average revenue per customer, resulting in shorter payback periods.

6. Turnover rate
There are two types of churn: customer loss and revenue loss. As a SaaS company, it’s good to coo email list measure both.

How to calculate customer churn rate?
Customer cancellation rate = Number of customers cancelled in a period / Total customers at the beginning of the period

Suppose you had 100 customers at the beginning and 90 at the end of the year, your customer churn rate = (100-90)/100 = 10%

How to calculate revenue turnover ratio?
Revenue churn rate = Revenue lost from customers who have churned in a period / Total revenue for that period

Revenue churn is a more accurate indicator of your company's health, as it measures cash flow rather than customer count. This is especially valuable when your ARPA fluctuates significantly.

In the example above, if the 10% of customers you lost contributed to 90% of your revenue, your revenue churn is 90%, even though customer churn is only 10%.

Why should I calculate the turnover rate ?
Churn rate is a measure of the loss of customers or revenue. It helps to understand:

The rate at which you are losing the customer/revenue you acquire
The customer satisfaction rate and therefore retention rate
The additional expenses you must incur to replace lost customers/revenue
The opportunity cost of losing acquired customers