Analytics
Customer Acquisition Cost
Customer acquisition cost (CAC) is the total cost of sales and marketing efforts required to acquire a new customer. It includes advertising, salaries, tools, and overhead attributed to customer acquisition.
Examples
A startup calculates its CAC at $120 by dividing total sales and marketing spend of $60,000 by 500 new customers gained.
Best Practices
Aim for a customer lifetime value to CAC ratio of at least 3:1 to ensure sustainable and profitable growth.