What does Cost of Customer Acquisition (CAC) mean?

The total (sales and marketing) costs, which must be incurred to acquire a customer.

It includes all costs associated with marketing and sales, from setting up a lead generation program to the final sale.

The cost of customer acquisition, or CAC, is the total cost of acquiring new customers. This includes the initial marketing and advertising costs, as well as the cost of the sales or support staff needed to close the deal. The goal of any business should be to minimize CAC and still acquire new customers.

Customer acquisition costs include:

• Advertising and marketing costs
• Sales salaries and commissions.
• Cost of goods sold
• Shipping and handling fees
• Credit card processing fees.

To calculate your CAC, simply divide your total acquisition cost by the number of new customers you acquired. For example, if it costs you €100 to acquire 10 new customers, your CAC will be €10. The lower your CAC, the more efficient your acquisition process and the better the financial health of your business will be.