E-Commerce Dictionary
Customer Acquisition Cost (CAC)
Definition
The cost of winning a customer to purchase a product or service.
Deep Dive
Customer Acquisition Cost (CAC) is a crucial metric that quantifies the total cost associated with acquiring a new customer to purchase a product or service. It encompasses all expenses related to marketing and sales efforts over a specific period, including advertising spend, salaries of marketing and sales teams, software costs, agency fees, and any other overhead directly attributable to gaining new customers. Calculating CAC involves dividing the total acquisition costs by the number of new customers acquired within that same period.
Examples & Use Cases
- 1A company spending $10,000 on digital ads in a month and acquiring 100 new customers, resulting in a CAC of $100
- 2A SaaS business investing in content marketing, SEO, and a sales team, and then dividing these costs by the number of new subscribers
- 3An e-commerce brand's total expenditure on social media ads, search engine marketing, and influencer partnerships to bring in first-time buyers
Related Terms
Customer Lifetime Value (CLV)Marketing ROIPay-Per-Click (PPC)