Customer Acquisition Cost (CAC)
Also known as: CAC, cost to acquire a customer
Customer acquisition cost (CAC) is the total sales and marketing spend required to win one new customer, calculated by dividing that spend by the number of customers gained.
Customer acquisition cost is what it costs, all-in, to turn a stranger into a customer. It rolls up ad spend, tools, and sales effort, then divides by new customers won. Healthy businesses keep CAC well below the lifetime value of a customer.
Because many customers begin as phone leads, getting CAC right means counting call-driven conversions; otherwise you misjudge which channels acquire customers efficiently. It builds on cost per lead and pairs with ROAS.
Frequently asked questions
How is CAC different from cost per lead?
Cost per lead measures the spend to generate a lead; CAC measures the spend to convert a lead into a paying customer. CAC is always higher because not every lead closes, and it reflects the full funnel rather than just the top.
How do you calculate customer acquisition cost?
Add up all sales and marketing spend over a period — ad spend, tools, and the sales effort to close — then divide by the number of new customers won in that period. Counting call-driven conversions matters here, or phone-heavy channels look more expensive than they really are.
What is a good customer acquisition cost?
A good CAC sits comfortably below the lifetime value of the customer it buys; a common benchmark is an LTV-to-CAC ratio around 3 to 1 or better. The absolute figure varies by industry, so judge it against customer value and payback period rather than a fixed dollar target.
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