Definition
CAC (Customer Acquisition Cost)
CAC is the total sales and marketing cost required to acquire one new customer, calculated by dividing total acquisition spend by the number of customers gained.
CAC only tells the full story when compared against customer lifetime value (LTV) — a high CAC can still be profitable if customers stick around and spend enough over time. A common benchmark is aiming for an LTV-to-CAC ratio of at least 3:1, though the right target varies significantly by business model and sales cycle length.
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