CAC (Customer Acquisition Cost)

CAC stands for Customer Acquisition Cost. It is a business and marketing metric that shows how much it costs to gain one new customer. CAC is usually calculated by dividing total sales and marketing costs by the number of new customers acquired during a specific period. These costs may include paid media, ad creative, campaign management, sales tools, content production, software, agency fees, and team resources.

For growing businesses, CAC is important because it helps measure how efficiently marketing and sales efforts are turning spend into revenue. A lower CAC can suggest that a company is acquiring customers more efficiently, while a higher CAC may signal the need to improve targeting, messaging, conversion rates, or content marketing. CAC is often reviewed alongside customer lifetime value, retention, and profitability to understand whether a company’s growth model is sustainable. By tracking CAC, businesses can make smarter decisions about budget allocation, customer acquisition, retention marketing, and growth strategy.