What is the customer acquisition cost formula and how is it calculated?
The customer acquisition cost (CAC) formula is a metric used to determine the cost associated with acquiring a new customer. It is calculated by dividing the total cost of sales and marketing efforts over a given period by the number of new customers acquired during that same period.
Here is the formula to calculate CAC:
CAC = Total Sales and Marketing Costs / Number of New Customers Acquired
For example, if a company spent $100,000 on sales and marketing efforts in a quarter and acquired 1,000 new customers during that same period, then the CAC would be $100 per customer.
It is important to note that the definition of “sales and marketing costs” may vary depending on the business and the scope of their efforts. Some common costs that may be included in this calculation are advertising, promotions, salaries of sales and marketing personnel, and other expenses related to lead generation and conversion.
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