Customer Acquisition Cost (CAC)

Customer Acquisition Cost (CAC) is exactly what it sounds like: The amount of money that a brand spends on acquiring new customers. CAC is most often used to measure the total cost of converting a lead into a paying customer, and it can be very helpful for organizations that wish to measure their return on investment into customer acquisition initiatives.  

CAC can be calculated by adding the total costs incurred when converting prospects into customers (i.e., through sales, marketing, and advertising) and dividing that amount by the total number of customers acquired in a given period, such as per month or per quarter.

CAC is important because if customer acquisition cost exceeds revenue for long enough, organizations risk going out of business. As such, it’s a critical metric and its use has risen dramatically in recent years as more and more organizations use web analytics platforms and data insights to strengthen their decision-making.

What is Customer Acquisition Cost (CAC)

How to Calculate Customer Acquisition Cost (CAC):

Account-based Marketing (ABM) FAQs

What is customer acquisition cost?

Customer acquisition cost refers to the total cost that a brand incurs to acquire a new customer, including marketing and sales expenses, divided by the number of customers acquired during a specific period.

Why is understanding customer acquisition cost important?

Understanding customer acquisition cost helps brands evaluate the effectiveness of their marketing and sales strategies, determine the ROI of customer acquisition efforts, and make informed decisions about resource allocation.

How can customer acquisition cost be reduced?

Strategies to reduce CAC include optimizing marketing campaigns, improving lead quality, increasing customer retention, and leveraging cost-effective acquisition channels.