What is the definition of CAC?
CAC, or Customer Acquisition Cost, refers to the total dollar amount a company spends to acquire a new customer. This includes not only the cost of onboarding and servicing, but also every outbound marketing and sales effort that contributes to the deal being closed.
Why does CAC matter?
As a leader, understanding your CAC is key to evaluating the efficiency and profitability of your growth strategy. It provides insight into how much you’re spending to grow your customer base, and whether that spend is yielding truly sustainable returns.
CAC Analysis
CAC analysis compares the total marketing and sales spend against the number of customers acquired in a given time period. This process can help leaders in marketing, sales, and RevOps make smarter decisions about where to allocate budget and resources in the future.
Key factors that can influence CAC:
- Ad spend
- Deal size / average purchase value
- Research and development costs
- Sales team compensation and tools
- Marketing operations and software
- (and more, depending on your GTM model)