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.
A 3PL, or third-party logistics provider, is a company that offers outsourced logistics services to businesses that need to manage their supply chain operations more efficiently.
Customer Lifetime Value (CLV) represents the total funds a consumer spends at a business for products and services without any specific time measurements restricting the data.
The conversion rate is the percentage of your total website traffic that purchases from your store.
