← Every exhibit
Which common accounting shortcuts destroy the operational validity of CAC metrics?
| Shortcut | Why it fails | Repair |
|---|---|---|
| Marketing spend divided by leads | The denominator is a prospect event, not a customer event | Define the customer event and count it consistently |
| Current customers divided into last quarter's spend | The cost window and cohort do not match | Pair the acquisition window with the customer-start window |
| Paid CAC compared with fully loaded CAC | The numerators answer different operating questions | Compare like with like, or name the decision difference |
| Last-touch attribution called incremental CAC | Observed credit is not a counterfactual | State the baseline or design that identifies additional customers |
| Revenue used as contribution | Serving, payment, delivery, or support costs are invisible | Declare the contribution boundary before payback or LTV |
| One average used for every segment | Mix and profit concentration disappear | Show cohort or segment distributions beside the average |
| CAC falling after a reporting change | The number may have changed because the boundary changed | Keep the old and new definitions side by side during transition |
| Lower CAC treated as proof of better growth | Acquisition cost says nothing alone about value, timing, or causality | Connect CAC to margin, payback, LTV, retention, and the comparison design |
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Reference & Evidence
Source: Table from this essay. Sources and interpretation are given in the article.