Customer Acquisition Cost (CAC) is a metric that represents the total cost a business incurs to acquire a new customer. It includes all the expenses associated with sales and marketing activities that are intended to attract and convert new customers.
The formula for calculating CAC is as follows:
CAC = (Total cost of sales and marketing) / (Number of new customers acquired)
For example, if a company spends $100,000 on sales and marketing activities in a given period and acquires 1,000 new customers during that period, the CAC would be $100 per customer.
CAC can be a valuable metric for businesses to track, as it provides insights into the efficiency and effectiveness of their sales and marketing efforts. By comparing CAC to the Lifetime Value (LTV) of a customer, businesses can determine whether their acquisition costs are sustainable and whether they are acquiring customers profitably. Ideally, a business wants to keep CAC as low as possible while still acquiring customers with high LTVs.
Click-through rate (CTR) is a metric that measures the number of clicks an ad or a link receives relative to the number of impressions, or views, it generates.
Free cash flow (FCF) is a measure of a company's financial performance that represents the amount of cash generated by the business after accounting for capital expenditures required to maintain or expand its operations.
Search Engine Optimization (SEO) is the practice of optimizing a website or web content in order to increase its visibility and ranking in search engine results pages (SERPs).
