Every customer pays back in six months. The faster it grows, the tighter cash gets.

Payback period describes the health of one customer. It says almost nothing about whether the business can afford to acquire the next two hundred at once.

By Steve 5 min read
Abstract bridge artwork for Every customer pays back in six months. The faster it grows, the tighter cash gets.

A business with a six month payback on customer acquisition is, by most conventional readings, in good shape. The cost of winning a customer is recovered inside two quarters, and everything after that is contribution. So the board approves more spend, the pipeline fills, new logos arrive at a faster clip, and the bank balance goes the wrong way. Nothing has broken. The unit economics are exactly as advertised. The problem is that payback is a statement about one customer and cash is a statement about all of them at…

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Important: General information only. Rialto Bridge articles describe patterns and considerations that may apply to a business; they are not financial, legal, tax or accounting advice, and they take no account of your particular circumstances. Consider your own situation and seek advice from a qualified professional before acting.

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