Customer Acquisition Cost (CAC)

When you say customer acquisition cost, you are opening the window to a huge world.

The customer acquisition cost is one of the main factors determining your business sustainability. So, it is worth the effort to understand in depth how it may impact your buinsess.

Here you can find all the deepenings you need about customer acquisition cost.

Customer Acquisition Cost (CAC) deepenings

How to calculate CAC: finally, the answer.
How to calculate CAC: finally, the answer.
How to calculate CAC of your online business is the question you never asked not to seem stupid. But you had to. It is damn worth.
Read time:
7
'
Business stage:
Grow
Startup financial metrics: the ones for the early days.
Startup financial metrics: the ones for the early days.
Startup financial metrics which really matter at the early days of your journey, from traction towards sustainable scalability.
Read time:
5
'
Business stage:
Manage
Bootstrapping e-commerce by design.
Bootstrapping e-commerce by design.
Bootstrapping e-commerce comes from the very beginning when you design how the business works. Here you find the main rule and some bonus tips.
Read time:
4
'
Business stage:
Grow
Cost of customer acquisition vs retention.
Cost of customer acquisition vs retention.
What's the cost of customer acquisition vs retention? Let's discover if it's better to focus on your customer base loyalty or growth.
Read time:
10
'
Business stage:
Grow
Live chat for sales: is it worth the spend?
Live chat for sales: is it worth the spend?
Live chat for sales is something you see everywhere on the web. If you are considering implementing it on your website, think carefully.
Read time:
9
'
Business stage:
Manage
Take e-mail marketing seriously or die.
Take e-mail marketing seriously or die.
Getting forms filled-out for e-mail marketing campaigns is a serious game. It’s a core business process. Let me show you why and how e-mail marketers play a relevant role.
Read time:
11
'
Business stage:
Grow
E-commerce startup? Start from brick&mortar!
E-commerce startup? Start from brick&mortar!
If you are considering e-commerce, whether you’re a retailer or manufacturer, you probably better go for brick&mortar first. Surprised? No reason to, finance has the answer.
Read time:
6
'
Business stage:
Manage
LTV and CAC: build the right metric, please.
LTV and CAC: build the right metric, please.
LTV and CAC themselves don’t tell you much, they need to be combined in one metric. Defining such metric as LTV/CAC or LTV-CAC you’re investigating two different aspects of your business.
Read time:
10
'
Business stage:
Grow
CAC is misleading, compute the Full Customer Cost.
CAC is misleading, compute the Full Customer Cost.
You run your customer acquisition strategy and get new customers aiming at converting them to repeated purchases. This marketing seems coming for free, right? No!
Read time:
7
'
Business stage:
Grow
CR and CPL: what's the cost of an estimation error?
CR and CPL: what's the cost of an estimation error?
We acquire leads paying a CPL for then converting them at a certain CR. These two factors determine the CAC. Which of the two factors is more relevant?
Read time:
6
'
Business stage:
Grow
LTV - CAC is meaningful only with the related resilience.
LTV - CAC is meaningful only with the related resilience.
When we draw our Business Plan, much of the success is due to the correct estimation of the LTV over CAC. Making errors in this estimation may cause big damages. How big may the damage be?
Read time:
7
'
Business stage:
Grow
CAC payback period: the definitive guide.
CAC payback period: the definitive guide.
LTV greater than CAC is not enough. You should get the most in terms of CAC payback period to grow sustainably. Discover all you need to understand it.
Read time:
15
'
Business stage:
Grow

Customer Acquisition Cost (CAC) back to basics

Back to basics, the customer acquisition cost is generally defined as the marketing&communication spending in a given timeframe divided by the numer of new customers acquired in the reference timeframe.

When you read such definition is almost impossible not agree with. But, the truth is that it works better on paper than in practice.

Why the traditional customer acquisition formula is a bit complex to be put in practice?

If you take the last month as the reference timeframe, you know exactly how much money you have spent for your Marketing & Communication plan. You can also get the exact numbers of new customers acquired.

But, what about the people who will get back to buy from you in a couple of months just because of a slower decision process? Here the formula fails.

This means that you should take the raw concept the formula gives you and try to apply it taking into account that the customer acquisition process is not a linear and instant path.

When we talk about performace marketing, it is probably easier to track the CAC because we are operating in an enviroment we have more control on.

But, hopefully, you will come up with other customer acquisition ideas along using perfomance marketing channels.

And when you add this layer to your marketing and communication plan, computing the customer acquisition cost may be trickier.

There's probably no immediate solution to the problem, so you should exploit at best your technology and analytics stack to compute the CAC.