Most DTC brands calculate customer acquisition cost against first-order revenue and declare a payback period. If CAC is £40 and average order value is £60 with a 50 percent gross margin, that is a £30 contribution margin — so payback in 1.3 orders, or roughly six weeks. Looks fine. Usually is not.
The problem is that first-order AOV is almost never representative. Acquisition campaigns are optimised toward your lowest-friction product — often a hero SKU at a promotional price. Real payback depends on cohort LTV, which takes 12 to 18 months to measure properly.
The calculation that actually matters is blended payback period: total acquisition spend in a given month divided by the cumulative gross profit from that cohort over time. Plot this across six cohorts and you will immediately see whether your payback curve is flattening (good) or whether most revenue is front-loaded (a churn problem in disguise).
Healthy benchmarks by category: beauty and personal care — six to nine months. Apparel — nine to 14 months. Consumables with subscription potential — three to six months. If you are outside these ranges by more than 20 percent, the unit economics of your acquisition channel are broken and scaling will accelerate losses, not profits.
The fix starts with cohort reporting in your analytics stack — Shopify, Triple Whale, or a custom data warehouse query. It is not glamorous work, but it is the difference between a brand that scales and one that runs out of runway at £5 million.