Customer Acquisition Cost (CAC)
Customer Acquisition Cost (CAC) is the total average cost a business spends to acquire one new customer.
CAC is calculated by dividing all sales and marketing costs over a period (ads, salaries, tools, commissions) by the number of new customers gained in that same period. If you spend 10,000 in a month and win 100 customers, your CAC is 100 per customer. The trick is including every cost that genuinely went into acquisition.
CAC matters because it sets the price of growth. On its own a high CAC isn't bad, but it only makes sense when weighed against how much a customer is worth over their lifetime; comparing CAC with Customer Lifetime Value (LTV) tells you whether your acquisition is profitable and sustainable.
One of the most reliable ways to improve the CAC-to-LTV ratio is to retain customers longer so each acquisition pays off more. Building a product people stick with, by acting on feedback collected in Feedjolt, raises lifetime value and makes your acquisition spend go further.