Customer Acquisition Cost (CAC) is defined as the cost of converting a lead into a customer.
You can calculate CAC by dividing the total amount spent on sales and marketing in a specific time period by the number of customers acquired during that same period.
Let’s plug in a few numbers to show how this works:
Customer Acquisition Cost (CAC)= Sales and Marketing Costs / Number of New Customers
- Sales and marketing costs = $1 million
- New customers = 25,000
Therefore, CAC = $40, or $1 million divided by 25,000.
- Key Performance Indicators (KPIs)
- Cost Per Lead (CPL)
- Customer Lifetime Value (CLV)
- Cost Per Lead (CLP)
Book: House of the Customer (2023) by Greg Kihlström