Often referred to as the CAC Payback Period, TTP measures the duration required for a customer to generate sufficient gross margin to recover the initial cost of their acquisition. It is a primary metric for evaluating the sustainability of marketing spend and cash flow health.
TTP Formula
TTP is reached when the cumulative gross margin from a customer or cohort equals the Customer Acquisition Cost (CAC).
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Strategic Implications
- Liquidity Management: A shorter TTP reduces the cash gap, allowing a business to reinvest capital into new acquisition cycles more rapidly.
- Channel Efficiency: Comparing TTP across marketing channels identifies which segments deliver the fastest return on investment, regardless of total lead volume.
- SaaS Viability: In subscription models, a TTP exceeding 12 months is generally considered a high-risk indicator for early-stage companies.