Customer Acquisition Cost (CAC) Over Time

CAC stands for customer acquisition cost. This refers to the total cost spent by a business to acquire a new customer, usually expressed as an average. This is typically calculated by dividing a business’s total Sales and Marketing budget in a given period by the number of new customers acquired, with a time offset to account for the length of a sales cycle. CAC allows a business to understand how expensive their Go To Market motion. An efficient motion means that the revenue generated by a new customer is more than enough to cover the CAC, which allows the business to fuel growth.