Customer acquisition cost (CAC) is a metric that measures the expense required from an organization to acquire a new customer.
Customer acquisition cost (CAC) has become an important benchmark as organizations employ analytical tools to understand which channels and campaigns are most successful in driving sales. This metric can help to develop more personalized campaigns to target specific audiences with a data-driven marketing approach. Measuring customer acquisition cost (CAC) can include analyzing any costs that contribute to gaining a new customer, such as labor, marketing, and product costs — and incorporates important metrics like cost of goods sold, average order value, and gross profit. To maintain a viable business model, you need to analyze what you are spending to acquire new customers relative to your earnings. The standard formula for calculating CAC is to take total market spend and divide this by new customers, which will provide an approximate value for understanding your average spending per customer.