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Table Figure 1 Growth that compounds

The CAC definition card

Name the cost, customer, cohort, window, horizon and comparison before interpreting the ratio.

FieldQuestion to settleFailure if omitted
Customer eventWhat counts as an acquired customer: a first paid contract, activated account, or another declared event?Leads, trials, bookings, and customers enter one denominator
Cost boundaryWhich media, sales, commission, onboarding, partner, service, or overhead costs are included?Two numbers use the same label but different numerators
Customer cohortWhich customers entered under the same offer, channel, market, and acquisition regime?A mix shift looks like efficiency change
Acquisition windowWhich cost period is paired with which customer starts?Current customers are paired with old or future spend
Assignment ruleWas cost allocated, directly observed, attributed, or tested against a counterfactual?Assigned CAC is presented as incremental CAC
Observation horizonWhat future margin, payback, or lifetime-value question is the number meant to serve?CAC becomes a verdict without a time question
Decision useWhat action changes if the number rises, falls, or separates by cohort?The metric becomes dashboard decoration

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Reference & Evidence

Source: Author's framework grounded in the customer-value and customer-profitability boundaries of Gupta, Lehmann and Stuart, Rust, Lemon and Zeithaml, Mulhern, and Malthouse and Blattberg. The card is a decision aid, not a benchmark.

Each line is a claim from the register this journal publishes against, resolved from the register at build time.

  • A The sensitivity is theirs and it is asymmetric: "a 1% improvement in retention, margin, or acqui"sition cost "improves firm value by 5%, 1%, and .1%, respectively" Gupta, Lehmann & Stuart. (2004) · GLS04-C2
  • A The framework is a trade-off device, in the authors' words: "a unified strategic framework that enables competing marketing strategy options to be traded off on the basis of projected financial return, which is operationalized as the change in a firm's customer equity rel"ative to the incremental expenditure needed to produce it Rust, Lemon & Zeithaml. (2004) · RLZ04-C1
  • A The components of a lifetime value are enumerated: "each customer's lifetime value results from the frequency of category purchases, average quantity of purchase, and brand-switching patterns combined with the firm's contribution margin" Rust, Lemon & Zeithaml. (2004) · RLZ04-C2
  • A Concentration is analysed as a distribution, not asserted as a ratio: "a sharply descending curve for the ordering of customer profit" corresponds to a skewed frequency distribution, and the Lorenz curve's shortcoming is that "it cannot portray percentiles of customers who represent a financial loss to a firm" Mulhern. (1999) · MUL99-C2
  • A "the feasibility of such strategies depends on the probabilities and costs of misclassifying customers", so it turns on prediction accuracy, forecast horizon, and the costs of misclassification. Malthouse & Blattberg. (2005) · MB05-C3

Grades: A, verified against the printed page of the primary source · B, primary source, text layer only · C, authoritative secondary · D, reported.

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