A business’s Customer Acquisition Cost (CAC) is the average cost associated with acquiring new customers.
To calculate this number, simply combine all expenses related to marketing, sales, and other customer acquisition activities in a given period and divide by the total number of new customers acquired in that time period. It provides businesses with valuable insight into the cost-effectiveness of marketing and sales efforts and can help assess sustainability by comparing customer acquisition strategies against the Lifetime Value of the Customer (LTV).
By making informed decisions to improve profitability by understanding customer acquisition cost vs Lifetime Value of Customer (LTV), businesses can make informed decisions that can increase profitability and improve profits overall.
