What category does Customer Acquisition Cost (CAC) belong to?

Customer Acquisition Cost (CAC) belongs to the "Concepts" category in personal knowledge management and productivity.

What are the key topics related to Customer Acquisition Cost (CAC)?

Key topics related to Customer Acquisition Cost (CAC) include: businesses, marketing, metrics, growth, finances.

What are alternative names for Customer Acquisition Cost (CAC)?

Customer Acquisition Cost (CAC) is also known as: CAC, Cost of customer acquisition, Acquisition cost.

Customer Acquisition Cost (CAC)

The total cost of acquiring a new customer, including marketing and sales expenses.

Also known as: CAC, Cost of customer acquisition, Acquisition cost

Category: Concepts

Tags: businesses, marketing, metrics, growth, finances

Explanation

Customer Acquisition Cost measures how much you spend to gain each new customer. Calculate it by dividing total sales and marketing costs by the number of new customers acquired in that period. CAC is meaningful when compared to Customer Lifetime Value (LTV)—a healthy business typically has LTV:CAC ratio of 3:1 or higher. Understanding CAC helps optimize marketing spend, identify efficient channels, and ensure sustainable growth. For creators and knowledge workers, CAC includes time spent on content creation, advertising costs, and tools. Reducing CAC might involve improving conversion rates, leveraging referrals, or creating more effective content that attracts ideal customers organically.

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