What is "Customer Acquisition Cost (CAC)" meaning?

CAC is used to determine the efficiency of a company’s marketing and sales efforts. A lower CAC means the business is efficiently acquiring customers at a lower cost, while a high CAC may indicate that resources are being spent inefficiently.

Example

"A SaaS company spent $20,000 on marketing in a month and gained 500 new customers, resulting in a CAC of $40 per customer."

How is "Customer Acquisition Cost (CAC)" used in business?

In business, CAC is used to measure the effectiveness of customer acquisition strategies. It helps businesses understand if their marketing and sales efforts are sustainable and profitable in the long term.

Pro Tip

Compare your CAC with your Customer Lifetime Value (CLV) to ensure that the cost of acquiring a customer is less than the revenue generated over their lifetime.

Related Terms

Customer Lifetime Value (CLV), Return on Investment (ROI), Marketing ROI, Sales Funnel