Customer acquisition cost

Customer acquisition cost (abbreviated CAC) is the amount of money a business needs to spend to acquire an additional customer.

Customer acquisition cost is typically expressed as a ratio, that is the sum of total costs of sales, marketing and associated overheads, divided by the number of acquired customers during a given period of time.

Relevance

Customer acquisition cost can be used in connection with SaaS, B2B software sales and startups. The metric is mentioned in the publications of venture capital firms such as Accel Partners, Bessemer Venture Partners or Matrix Partners. The CAC ratio also appears in business oriented magazines such as Forbes and Inc.com.

See also

• Customer acquisition management
• Customer lifecycle management
• Performance metric
• Controlling
• Marketing
• Sales
• Venture capital
• Software as a service (SaaS)

References

• Chen, Pei-Yu (Sharon); Hitt, Lorin M. (2000), "Switching Cost and Brand Loyalty in Electronic Markets: Evidence from On-line Retail Brokers" (PDF), Proceedings of International Conference on Information Systems {{citation}}: Missing or empty |title= (help)
• Domingos, Pedro; Richardson, Matt (2002), "Mining the Network Value of Customers" (PDF), In Proceedings of the Seventh International Conference on Knowledge Discovery and Data Mining, ACM Press, pp. 57–66 http://www.sigkdd.org/ {{citation}}: Missing or empty |title= (help)
• Botteri, Philippe (2008-03-02). "Measuring sales and marketing effectiveness of SaaS companies: The CAC Ratio".
• Botteri, Philippe (2008-11-02). "One Number to Manage Your SaaS Sales &Marketing Spend: The CAC ratio" (PDF). Bessemer Venture Partners.
• Skok, David (2010-02-17). "SaaS Metrics – A Guide to Measuring and Improving What Matters".
• Hsu, William (2012-08-23). "New Rules For E-Commerce". Forbes.com.
• Haden, Jeff (2011-12-27). "4 Business Metrics You Can't Afford to Ignore". Inc.com.
• Gruher, Scott (2011-09-24). "Go to Market Strategy: How Much Are Your Customers Worth?".
• Rouse, Margaret (2010-03). "Customer acquisition cost". TechTarget. {{cite web}}: Check date values in: |date= (help)
• Patel, Neil (2011-10-19). "9 Metrics to Help You Make Wise Decisions About Your Start-Up".