The Definition of CAC [In Under 100 Words]

CAC stands for customer acquisition cost — it’s a metric your CEO obsesses over.

In other words, your CAC is the total sales and marketing cost required to acquire a new customer over a given time period. That time period could be a week, a month, a quarter, or even a year. 

The total sales and marketing cost includes all the program and advertising spend, salaries, commissions, bonuses, and overhead.

Let’s say Sales and Marketing spent $400,000 last quarter, and you acquired 40 new customers. Your CAC is $10,000:

$400,000/40 customers = $10,000/customer

And that’s it!