Supportsoft Glossary

Customer Acquisition Cost Explained for Marketers

Cost of Customer Acquisition (CAC) is the total expense associated with the acquisition of a new customer, including marketing, sales, and general overhead expenses. This metric provides insight into how effective and sustainable growth strategies are based on CAC's efficiency.

CAC is determined by dividing the total cost of acquisition by the number of new customers acquired within a specified timeframe. Tracking CAC enables companies to assess the success of their marketing campaigns and optimise their spending on marketing and sales strategies.

For IT and ITES firms, managing CAC is imperative because of the length of their sales cycle and the value of their contracts. Reducing CAC typically requires enhanced targeting, better conversion optimisation, and more efficient lead qualifying.

Analysing CAC in conjunction with lifetime value data enables organisations to gain insights into profitability and the possibilities of future growth.