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.
More Customer Success & Service kpi library
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