Customer Acquisition Cost (CAC)
The fully-loaded cost (media + sales + tooling) of acquiring one new paying customer over a given period.
“How much are we spending, in total, to win each new customer?”
Whether growth is being bought efficiently and whether the current spend level is sustainable.
Whether those customers are profitable long-term — always pair with LTV or NRR to judge payback.
Numerator
Total Acquisition Spend (media, sales comp, tooling attributable to acquisition)
Denominator
Number of New Customers Acquired in the period
Example
$400,000 in blended acquisition spend yields 800 new customers. CAC = $400,000 / 800 = $500.
Recommended visualization: Line chart with LTV:CAC ratio overlay
Decide up front which costs are 'fully loaded' (e.g., include SDR comp? brand spend?) and document it — CAC is one of the most inconsistently defined metrics across companies.
- Confirm spend and new-customer counts use the same period and the same 'new customer' definition (e.g., excludes reactivations)
- Reconcile marketing-reported spend against finance's GL to avoid double counting
- Excluding sales compensation from CAC to make the number look better, understating true cost of growth
- Comparing CAC across channels with very different sales-cycle lengths without normalizing for payback period
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