Customer acquisition refers to the process of attracting and converting new prospects into paying customers using a combination of marketing and sales strategies. It involves identifying target audiences, generating leads, and guiding them through the buyer’s journey.

Customer Acquisition Cost (CAC) is the total expense a business incurs to acquire a new customer. This includes the costs related to marketing, sales, advertising, and promotional efforts over time.

Calculating Customer Acquisition Cost ( CAC)

Customer Acquisition Cost ( CAC)  = ( Total Acquisition Costs)Divided By ( Number of new customers gained)

A low CAC relative to customer lifetime value (CLV) indicates business growth and sustainable marketing performance. It helps businesses evaluate the efficiency and profitability of their customer acquisition strategies.

Benefits of Customer Acquisition Cost (CAC) 

Tracking Customer Acquisition Cost (CAC ) efficiently allows businesses to 

• Wisely allocate the budget 
• Supports pricing strategies efficiently 
• Optimize marketing campaigns
• Scale customer acquisition 
• Enhance business profitability effectively.

Therefore, CAC analysis empowers businesses to make data-driven decisions and contribute to sustainable business growth.