Customer Acquisition Cost (CAC) Ratio

• Metric
• Marketing
• Analytics

The ratio of the total cost of acquiring new customers to the number of new customers acquired over the same period.

Problem it addresses

Determining the efficiency and scalability of customer acquisition strategies is crucial for businesses. Without understanding the CAC ratio, companies may continue investing in unprofitable channels or tactics, leading to unsustainable growth.

How it helps

The CAC ratio helps businesses evaluate the effectiveness and efficiency of their marketing efforts in acquiring new customers. A lower CAC ratio indicates a more cost-effective acquisition strategy, allowing for reinvestment in growth or improved profitability. It informs strategic decisions around marketing spend, channel selection, and customer targeting.