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What is CAC?
CAC, or Customer Acquisition Cost, is a metric that measures the cost of acquiring a new customer.
How to calculate CAC?
It’s calculated by dividing the total cost of sales and marketing efforts by the number of new customers acquired. The formula for CAC is:
CAC = Total cost of sales and marketing / Number of new customers
It’s important to keep in mind that the total cost of sales and marketing includes all expenses related to acquiring new customers, such as advertising, sales salaries, and commissions, marketing materials, and any other costs associated with the sales and marketing efforts.
To get an accurate CAC, it’s also important to calculate the cost over a specific time period and to consider only the new customers acquired during that period, rather than the total number of customers.
It’s also helpful to segment the CAC by channels or campaigns, to understand which efforts are the most cost-effective at acquiring new customers.
By calculating CAC and regularly monitoring it, businesses can gain insight into the efficiency of their sales and marketing efforts, and make informed decisions about where to allocate resources for future customer acquisition efforts.