What is Customer Acquisition Cost?
Learn about the fundamentals of customer acquisition cost in this clip from our eLearning series.
How can you calculate the amount it costs to acquire a customer?
Customer acquisition cost, or CAC, is simply how much you spend to acquire a customer. It's represented by by the simple formula outlined below.
To calculate CAC, you add up your sales expenses plus your marketing expenses. These include all the salaries, tools, systems, advertising costs, and other expenses across both departments. After that, you divide the sum by the number of new customers acquired.
One thing to remember is that all the numbers used in the CAC formula must cover the same time period. For instance, you can measure CAC over a year, a quarter or even a month. In conclusion, it's up to you to determine an appropriate time period to capture customer acquisition cost.