Customer Acquisition Cost (CAC)
Customer acquisition cost is a measure that indicates the total marketing investment needed to attract new customers. It helps determine the return on investment of efforts to grow the company’s client base. The calculation of CAC can be done by simply dividing all costs spent acquiring new customers into how many of them were acquired during that time period. For instance, if you spent $500 on marketing in a month and acquired 50 customers in the same month, their CAC is $10.
Online businesses should focus on reducing these costs through optimizations and channel diversification. It’s challenging, but at the same time, it’s one of the greatest opportunities — not only in terms of success but also sustainability over time.