CAC (Customer Acquisition Cost)#
The average cost to acquire one new customer.
Important
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What it is#
Customer acquisition cost (CAC) is the total sales and marketing spend required to win one new customer — all acquisition costs divided by the number of customers acquired in the period. It is the cost half of unit economics.
What goes in it#
CAC bundles ad spend, marketing tools and agencies, and sales salaries and commissions — not just media cost. It differs from CPA (cost per acquisition), which is usually a single-channel metric, and it must be computed with matched time periods so costs line up with the customers they actually acquired.
The LTV:CAC ratio#
CAC only means something next to LTV. The LTV:CAC ratio — lifetime value divided by acquisition cost — gauges whether growth is profitable: around 3:1 is the healthy benchmark, below 1:1 loses money on every customer, and above ~5:1 can signal you’re under-investing in growth.
Theme: Business & Growth Analytics · All terminology
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Mind map — connected ideas
LTV (Customer Lifetime Value) · Incremental Sales · Conversion Rate (CR) · CTR (Click-Through Rate) · Cost-Per-Click (CPC) Models · Blended CAC (Customer Acquisition Cost)
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More in Business & Growth Analytics
Blended CAC (Customer Acquisition Cost) · Cannibalization · Channel-Specific CAC (Customer Acquisition Cost) · Churn · Cohort · Cohort-Based LTV (Simple Version) · Conversion Rate (CR) · Cost-Per-Click (CPC) Models · Cross-Selling · CTR (Click-Through Rate) · Customer Lifetime · Customer Segmentation · D2C (Direct-to-Consumer) · FTEs
See also
Source article Adapted (context, re-expressed) in our own words from: CAC (Customer Acquisition Cost) (insightful-data-lab.com).