Customer Acquisition Cost
Customer Acquisition Cost (CAC) is the total cost of acquiring a new customer, including all sales and marketing expenses. It's half of the unit economics equation that determines if your business model works.
You spent $100K on sales and marketing last quarter and acquired 50 customers. CAC = $100K / 50 = $2,000.
CAC tells you how efficiently you're acquiring customers. Too high, and you'll burn cash faster than you can grow. The magic is in the LTV:CAC ratio. You need to earn back more than you spend to acquire each customer.
SMB SaaS
Mid-market SaaS
Enterprise SaaS
Include all sales and marketing costs: salaries, commissions, ad spend, tools, events, content production, and overhead. Some companies calculate "fully-loaded CAC" which includes a portion of G&A.
Both. Blended CAC gives you the overall picture, but segmented CAC (by channel, segment, or cohort) shows you where to double down and where to cut.
Improve conversion rates, focus on higher-intent channels, build organic/referral loops, optimize sales process efficiency, and target better-fit customers who close faster.
Customer Lifetime Value
Customer Lifetime Value (LTV or CLTV) is the total revenue you expect to earn fr...
Lifetime Value to Customer Acquisition Cost Ratio
The LTV:CAC ratio compares the lifetime value of a customer to the cost of acqui...
Customer Acquisition Cost Payback Period
CAC Payback Period is the number of months it takes to recover the cost of acqui...
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