| CAC |
| Customer Acquisition Cost |
Customer acquisition cost (CAC) is a measure of the total cost of acquiring a new customer, including all marketing and sales expenses. |
| CAC is an important metric for businesses because it helps them understand the efficiency of their customer acquisition efforts. A high CAC may indicate that the company is spending too much to acquire new customers, while a low CAC may indicate that the company is efficiently acquiring new customers. CAC can be compared against the customer lifetime value (CLV) of customer to see if the investment in customer acquisition is worth it. By tracking CAC over time, businesses can identify trends and make adjustments to their marketing and sales strategies to optimize their customer acquisition efforts. |
How to Calculate: |
It is calculated by dividing the Total Cost of Sales (TCS) and Marketing Efforts (ME) by the number of New Customers (NC) acquired during a given period. |
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| For example, if a company spends $100,000 on marketing and sales efforts over a period of time, let's say a year, and acquires 1000 new customers over that year. CAC would be $100 ( $100,000 / 1000 customers) |