Glossary • Marketing & Business Leadership
Customer Acquisition Cost (CAC) is the total cost a company spends, on average, to acquire one new customer. It includes all marketing and sales expenses divided by the number of new customers acquired in a given period.
CAC = Total Sales & Marketing Spend / Number of New Customers Acquired
For example, if you spend $100,000 on sales and marketing in a quarter and acquire 50 new customers, your CAC is $2,000.
CAC benchmarks vary significantly by industry, deal size, and sales motion. What matters most is the ratio of CAC to Customer Lifetime Value (LTV).
One of the first things a fractional CMO does is establish CAC by channel. Most companies lack this visibility — they know total spend but can't attribute cost to specific acquisition sources. Building CAC visibility is foundational to optimizing any GTM motion.
Blended CAC is the total sales and marketing spend divided by all new customers. Channel CAC measures the cost to acquire a customer from a specific channel (paid search, content, outbound). Channel CAC helps identify which channels are most efficient.
Yes. CAC should include all sales and marketing payroll, benefits, tools, agency fees, and ad spend. Many companies understate CAC by excluding salaries, which leads to poor investment decisions.
The CAC payback period is the number of months it takes to recover the cost of acquiring a customer through gross margin contribution. Payback = CAC / (Monthly Revenue per Customer x Gross Margin %).
Mark Gabrielli is a Fractional CMO and COO serving B2B companies in healthcare, SaaS, fintech, and beyond. Results in 30 days.
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