KPICustomer Success & Service

Customer Acquisition Cost (CAC)

Total cost of acquiring a new customer including sales and marketing spend

What is Customer Acquisition Cost (CAC)?

Customer acquisition cost is the average sales and marketing spend needed to win one new customer. It shows how expensive it is to grow the customer base.

It is a core measure of growth efficiency, and only makes sense next to what a customer is worth.

How this KPI is measured

Function
Customer Success & Service
Sub-function
Unit Economics
Industry
All Industries
Type
Lagging
Impact
Financial control
Unit
$
Measurement frequency
Monthly / Quarterly
Formula
Total sales & marketing spend in period / Number of new customers acquired in period

How to calculate it

Divide total sales and marketing spend in the period by the number of new customers acquired in that period.

For example, if 1,200,000 was spent and 200 customers were acquired, CAC is 6,000.

Include salaries, tools, advertising and overheads, and consider lag between spend and customers won if the sales cycle is long. Calculate by channel and segment.

Where it is used

  • Judging growth efficiency

    See the cost of winning customers.

  • Setting budgets

    Estimate spend needed for growth.

  • Comparing channels

    Find the cheapest sources.

How to improve it

Tips and common mistakes

  • A blended CAC can hide expensive channels.
  • Consider the sales cycle lag.
  • Read with LTV and payback.

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