Customer acquisition cost, or CAC, is a business metric that measures the total expense required to acquire a new customer. It includes all marketing and sales costs involved in guiding a lead through the funnel to conversion. These costs may cover advertising, content creation, sales team salaries, software subscriptions, creative production and overhead. CAC helps organisations understand the efficiency and sustainability of their customer growth strategies.<\/p>\n
To calculate CAC, divide the total cost of acquiring customers by the number of new customers gained during the same time period. For example, if you spend $10,000 on marketing and sales and acquire 100 new customers, your CAC is $100. This number is often compared to customer lifetime value to determine profitability. If CAC is too high compared to the revenue a customer generates over time, the business may struggle to scale. On the other hand, a low CAC indicates cost-effective growth and healthy return on investment.<\/p>\n
Improving CAC involves optimising both acquisition efforts and conversion efficiency. Strategies include refining audience targeting, shortening the sales cycle, improving lead qualification and enhancing campaign performance. For nonprofits, CAC can reflect how much is spent to acquire each new donor or volunteer. In subscription or SaaS models, tracking CAC alongside metrics such as churn rate and lifetime value helps teams assess long-term impact. Whether you are building brand awareness or scaling paid acquisition, understanding and managing CAC is essential for budgeting, forecasting and sustainable growth.<\/p>\n","protected":false},"excerpt":{"rendered":"
Customer Acquisition Cost (CAC) is the total expense for acquiring a new customer. It includes marketing and sales costs divided by new customers, helping assess efficiency.<\/p>\n","protected":false},"featured_media":0,"parent":0,"menu_order":0,"template":"","glossary-letter":[1285],"glossary-category":[1286,1281],"glossary-topic":[1256],"glossary-tag":[],"class_list":["post-12206","tw_glossary","type-tw_glossary","status-publish","hentry","tw_glossary_letter-c","tw_glossary_category-management","tw_glossary_category-sales","tw_glossary_topic-marketing"],"acf":[],"yoast_head":"\n