Customer Acquisition Cost (CAC)
Category: Strategic
The total cost of acquiring a new customer, including marketing and sales expenses.
What it Measures ?
What we spend to get one new customer.
Relevant StakeHolders
Marketing Team, CFOs, Founders
Why it Matters ?
Calculates cost to acquire a new customer, helping manage marketing and sales budgets.
In-depth Use Case / Real-world Example
If a manufacturer spends ₹10 lakhs on marketing and sales in a month and gains 50 new customers, the CAC is ₹10,00,000 ÷ 50 = ₹20,000. Comparing CAC with CLV ensures that the company spends efficiently to acquire profitable customers.
Sample Formula
Total Cost of Acquiring Customers / Number of New Customers