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    CAC (Customer Acquisition Cost)

    Customer Acquisition Cost (CAC) is the total sales and marketing cost required to acquire one new customer, calculated by dividing total acquisition spend by the number of new customers gained over the same period.

    CAC is most meaningful when compared against Customer Lifetime Value (LTV) — a common health benchmark is an LTV:CAC ratio of at least 3:1, meaning a customer generates at least three times what it cost to acquire them over their relationship with the business.

    CAC can be calculated per channel (blended CAC vs. paid-channel-only CAC) and tends to rise over time within a channel as easy, low-cost audiences are exhausted — which is why diversifying acquisition channels and improving conversion rate (rather than only increasing spend) are common levers to keep CAC sustainable.

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