What is Customer Acquisition Cost (CAC)?
Customer Acquisition Cost (CAC) is a metric that measures the resources needed to acquire new customers and the costs associated with it. It is an important metric that businesses should focus on in order to ensure that they are able to sustainably grow their customer base.
What are the Components of CAC?
The components of CAC are the resources and costs that are associated with acquiring new customers. These components can include:
- Marketing: Advertising, social media, search engine optimization, etc.
- Sales: Commission, salaries, bonuses, etc.
- Product: Development costs, customer service, technical support, etc.
How to Calculate CAC?
The formula for calculating CAC is as follows: Total Cost of Acquiring Customers / Number of Customers Acquired For example, if a company spends $10,000 on marketing and sales, and acquires 100 customers, the CAC would be $100.
Conclusion
Customer Acquisition Cost is an important metric that businesses should pay attention to in order to ensure that they are able to sustainably grow their customer base. By understanding CAC, businesses are able to identify areas of improvement in order to reduce the costs associated with acquiring new customers. For more information, please visit: