Definition
Customer acquisition cost adds up everything used to win clients (advertising, tools, contractors, a share of sales and marketing salaries) and divides it by the number of new clients in the period.
It differs from the cost per enquiry or per conversion shown by ad platforms: an enquiry is not yet a client, and the conversion rate between the two changes the whole calculation.
Value for a business owner
CAC is not judged alone. Read against lifetime value, it tells how much it is reasonable to spend to win a client; read against monthly margin, it gives the number of months needed to recover that spending.
At Stratedge Consulting
The CAC, LTV and payback calculator runs the numbers from your figures. In a leadership cockpit, CAC is tracked by channel and by month, next to sales. See the Cockpit and dashboards page.
Common mistakes
Counting only ad spend. Tools, contractors and team time often make up half of the real cost.
Dividing by the number of enquiries rather than clients. The figure looks low and says nothing about profitability.