Customer acquisition cost(CAC)
Measurement and data
Measurement and data
CAC is the total cost of winning one new customer: ad spend plus the people, tools and hours involved.
CAC is broader than CPA: where CPA usually counts media cost per conversion, CAC also includes agency or team cost. That makes it the fairer number for a business case.
Always put CAC next to lifetime value. A healthy ratio is usually a multiple, and the longer your payback period, the more working capital you need to grow.
Related terms
- Customer lifetime valueCustomer lifetime value is the total margin you earn from an average customer for as long as they stay, not just on the first purchase.
- CPACPA is ad cost per conversion: total spend divided by conversions, such as enquiries or purchases.
- ROASROAS is revenue generated by your ads divided by what you spend on them. A ROAS of 4 means €4 revenue per euro spent.