Strategy and goals
Customer acquisition cost (CAC)
What it costs to win one new customer: total sales and marketing spend in a period divided by the new customers won in that period.
What it is
Unlike cost per lead or cost per click, CAC counts the whole cost of getting to a paying customer, including the people and tools behind the ads.
Why it matters
For lead generation and e-commerceIt is the number that decides how fast a company can afford to grow. A rising CAC is a warning when the value of each customer is not rising with it.
How it is measured
Formula
CAC = sales and marketing spend / new customers wonAdd up the spend for a period and divide by the new customers that period produced. Many teams track a paid CAC (ad spend and its direct costs) next to a fully loaded one.
A common mistake
Dividing by all customers, including repeat buyers or customers who came without ads. That makes acquisition look cheaper than it is.