GLOSSARY
Customer Acquisition Cost (CAC)
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Customer Acquisition Cost (CAC) is the total cost a business incurs to acquire a new customer. It includes all expenses related to marketing, sales, and onboarding.
What is Customer Acquisition Cost (CAC)?
Customer Acquisition Cost (CAC) is the total cost a business incurs to acquire a new customer. It includes expenses related to marketing, sales, and onboarding.
Why does CAC matter?
Understanding CAC helps startups assess the efficiency of their marketing and sales efforts. It is crucial for determining the ROI of customer acquisition strategies.
Example:
If a startup spends $10,000 on marketing and sales efforts in a month and acquires 100 new, the CAC would be $100.
Related Concepts:
- Lifetime Value (LTV): Compares the revenue a customer brings over their lifetime to the cost of acquiring that customer.
- Customer Retention: Focuses on keeping existing customers engaged and satisfied to reduce the need for high CAC.