Customer Acquisition Cost (CAC refers to the total costs that a business incurs to acquire a new customer. This includes all expenses related to marketing and sales, which may include:
Marketing costs: Expenses on advertising (online and offline), content production, search engine optimization (SEO), social media campaigns, email marketing, and other marketing activities.
Selling Expenses: Salary and commission to the sales team, costs of sales tools and software, travel expenses for sales personnel, and other related expenses.
Support and customer service: Expenses on customer service personnel and tools that support customers through the purchase process.
CAC is used to assess the profitability and effectiveness of marketing and sales activities. The calculation can be measured against the Customer Lifetime Value (CLV).
