What is Customer Acquisition Cost (CAC)?
Customer Acquisition Cost (CAC) is the total expense a business incurs to convert a prospect into a paying customer. It aggregates sales salaries, marketing spend, advertising budgets, software tools and operational overhead, then divides by the number of new customers gained in the same period. A healthy business maintains a CAC:LTV ratio of at least 1:3.
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Total annual salaries for sales or business-development personnel.
Annual ad spend across digital, traditional and other channels.
CRM, analytics, ad-management and supporting software.
Blog posts, video, graphics and other creative assets.
Trade shows, sponsorships and acquisition events.
Onboarding and back-office overhead tied to acquisition.
Agencies or consultants engaged to drive acquisition.
Total number of customers acquired in the period.