CAC Ratio
Customer Acquisition Cost Ratio
Key business metric that measures the average total expense incurred to acquire one new paying customer, encompassing all sales and marketing efforts over a specific period.
Description
CAC shows how efficient marketing and sales investment is in attracting new customers, calculating how much it costs to acquire them compared to the value they generate for the company, which helps analyze the profitability and sustainability of business growth.
| Direction | Minimize |
| Unit | Money |
| Formula | Total marketing and sales cost / Number of new customers acquired |
| Frequency |
|
One of its main advantages is that the CAC Ratio makes it possible to assess whether the business strategy is truly generating profitable growth, since it can be applied to different acquisition channels, customer segments, or business lines within a company.
A ratio above 3 generally indicates that the company is getting a good return on its customer acquisition investment, while a value close to or below 1 may signal that the cost of acquiring customers is equal to or greater than the value they generate, which poses a risk to the business’s profitability.
KPI Calculator: “Calculate your CAC”
Formula
CAC = { Total marketing and sales cost } / { Number of new customers acquired }
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