What is Customer Acquisition Cost? [Hint: Growth Efficiency]
Customer Acquisition Cost (CAC) is how much it costs to acquire one customer.
Definition
CAC = Total marketing spend ÷ Number of new customers
If you spend £10,000 and acquire 500 customers then your CAC is £20.
Why it matters
CAC tells you how efficient your growth is:
- If CAC is rising then you are paying more for the same customer
- If CAC is falling then your marketing is becoming more efficient
What most people miss
CAC means nothing on its own. You have to compare it to what that customer is actually worth.
If it costs you £20 to acquire a customer… but they only spend £15... well, you don’t have a business sadly.
Bottom line
Strong brands control CAC relative to value.
Discussion
- What is your current CAC by channel (paid social, search, etc.)?
- How does it compare to your average customer value?
- Where are you seeing CAC increase and why?
6
2 comments
What is Customer Acquisition Cost? [Hint: Growth Efficiency]
skool.com/how-fashion-really-works
Learn the commercial and executive skills used inside real luxury and fashion organisations.
Leaderboard (30-day)
1
+4
2
+3
3
+3
4
+2
5
🚀
+2
Powered by