CAC (Customer Acquisition Cost)

CAC is an abbreviation for Customer Acquisition Cost. It is the cost to your business of acquiring a new customer and generating a new sale. If you consider CAC across all your marketing activities, you are more likely to make a profit in your business.

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What is CAC?

CAC is often used by both small and large companies to calculate how much money the company spends to get a new customer.

It is important to know your company's Customer Acquisition Cost, because as a company you cannot avoid spending some money to attract customers and thus create sales and growth.

If you know about CAC, you can make sure you're making the most of your marketing dollars, so you end up earning more from your customers than you spend attracting them.

Find your company's CAC using the following formula:

Your company's total sales and marketing costs / number of new customers = CAC.

A low CAC number can contribute to greater growth in your business

The company's CAC number should be as low as possible.

The lower the CAC, the less money is spent on attracting new customers. But it is important to bear in mind that there will always be costs associated with acquiring new customers and generating growth.

CAC marketing helps you learn the cheapest way to get more customers

You can use different methods to get new customers for the least cost. For example, you can use CAC marketing to assess which marketing channels that is cheapest for you to use.

For example, you might get the most customers for the least money by advertising on Facebook. In this case, this form of marketing would be a good one to use in your business.

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Do you need help with your business data or are you considering whether it makes sense for your business to focus on data collection? Contact Ian Rosenfeldt for a project dialogue.

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