Customer Acquisition Cost (CAC) is a metric that represents the total cost a business incurs to acquire a new customer. It includes all the expenses associated with sales and marketing activities that are intended to attract and convert new customers.
The formula for calculating CAC is as follows:
CAC = (Total cost of sales and marketing) / (Number of new customers acquired)
For example, if a company spends $100,000 on sales and marketing activities in a given period and acquires 1,000 new customers during that period, the CAC would be $100 per customer.
CAC can be a valuable metric for businesses to track, as it provides insights into the efficiency and effectiveness of their sales and marketing efforts. By comparing CAC to the Lifetime Value (LTV) of a customer, businesses can determine whether their acquisition costs are sustainable and whether they are acquiring customers profitably. Ideally, a business wants to keep CAC as low as possible while still acquiring customers with high LTVs.
Advertising Cost of Sale (ACoS) is a common Amazon metric that reflects the actual expense of generating revenues from customer transactions due to advertising.
A Universal Product Code (UPC) is a graphic and numerical code printed on retail packages and is often referred to as a barcode.
Click-through rate (CTR) is a metric that measures the number of clicks an ad or a link receives relative to the number of impressions, or views, it generates.
