Conversion Optimisation
Customer Acquisition Cost (CAC)
Also known as: CAC & Cost per acquisition
Plain English
How much it costs to get a new customer.
Definition
Customer glossaryAcquisitionAcquisition is the process of attracting new users or customers to a product, service, or platform.Open glossary term Cost (CAC) is the total cost of acquiring a new customer, including marketing, sales, and related expenses.
In practice
Used to evaluate the glossaryEfficiencyEfficiency measures how quickly and easily users can complete tasks once they are familiar with a system.Open glossary term of glossaryAcquisitionAcquisition is the process of attracting new users or customers to a product, service, or platform.Open glossary term glossaryStrategyStrategy is a high-level plan that defines long-term goals and the approach to achieving them.Open glossary term and compare against LTV.
In context
It only means something next to LTV and a payback period. A high CAC is fine if customers stay for years and fatal if they leave in three months.
The reality
If CAC is too high relative to LTV, growth becomes unsustainable.
Compared with
Customer Acquisition Cost vs Cost per Lead
Cost per glossaryLeadA lead is a potential customer who has shown interest in a product or service, typically by providing contact information or engaging with content.Open glossary term measures getting someone interested. CAC measures getting them to buy. A cheap lead that never converts raises CAC while making the marketing report look good.
FAQ
Common questions
A few practical answers to the questions that usually come up around this term.
What is customer acquisition cost?
CAC is the total cost of acquiring a new customer.
Why is CAC important?
It shows how efficient your glossaryAcquisitionAcquisition is the process of attracting new users or customers to a product, service, or platform.Open glossary term efforts are.
How do you calculate CAC?
By dividing total glossaryAcquisitionAcquisition is the process of attracting new users or customers to a product, service, or platform.Open glossary term costs by the number of new customers.
How does CAC relate to LTV?
CAC should be lower than LTV for sustainable growth.
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