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Customer acquisition cost (CAC) is the total amount a business spends on sales and marketing in a period, divided by the number of new customers it won in that period. It shows what one new customer costs to win, and it is most useful when compared with what a customer is worth over time.
In short
A worked example, not a benchmark: if a business spends $12,000 on marketing and sales in a quarter and wins 30 new customers, its CAC is $400. Count every cost that produced those customers, including ad spend, agency fees, tools, sales salaries and creative, or the number will look better than it is.
Compare CAC with customer lifetime value. If winning a customer costs more than the customer pays over the relationship, growth loses money. Track CAC by channel, because one channel can hide a poor result in another. The payback period is the time it takes a customer's margin to repay their CAC.
Our planning approach page explains how we plan around these numbers.
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