CAC (consumer acquisition cost)

CAC (consumer acquisition cost) is the expense a business incurs to gain new customers. The CAC formula is:

CAC = (cost of sales + marketing) (# of new customers acquired)

This takes the total expenses to bring in new customers and divides that by the number of customers obtained during a particular period. Businesses can measure their long-term viability by comparing their CAC to the LTV (lifetime value of customer).

Some trusted methods for reducing CAC include understanding customers’ needs, maintaining existing customer relationships, and engaging customers at the beginning of a product cycle.