The total sales and marketing cost required to acquire one new customer, typically calculated by dividing total acquisition spend by the number of new customers gained in a period.
Why it matters
CAC is one half of the most important ratio in growth marketing — CAC relative to LTV. A business can have strong revenue and still be unsustainable if it costs more to acquire a customer than that customer will ever be worth.
In a sentence
"Our CAC crept up after we expanded into paid social, so we're auditing which channels are actually driving efficient growth."
Related terms
- Antonyms: LTV (customer lifetime value) is the natural counterpart, not an opposite, but the two are always discussed together.
- Often confused with: CPA (CAC specifically measures the cost of a paying customer; CPA can refer to the cost of any defined action, including a lead or signup that hasn't converted to revenue).
- Synonyms: Cost of acquisition, acquisition cost.