CAC (Customer Acquisition Cost)
CAC (customer acquisition cost) is the average cost to win one new customer — total sales and marketing spend divided by the number of new customers.
Formula
CAC = Total sales & marketing spend ÷ New customers acquired
CAC is the true, fully-loaded cost of growth: not just ad spend but the sales and marketing effort behind each new customer. Spend $10,000 to acquire 100 customers and your CAC is $100.
CAC only makes sense next to lifetime value. The widely-used benchmark is an LTV:CAC ratio of at least 3:1 — you want each customer to be worth several times what it cost to acquire them. A ratio near 1:1 means you're buying customers at a loss.