What does CAC stand for in the context of customer acquisition?

CAC stands for Customer Acquisition Cost, which is a critical metric for businesses, especially startups, as it quantifies the total cost associated with acquiring a new customer. This includes all expenses related to sales and marketing efforts, salaries of the sales team, advertising costs, and any other operational costs incurred during the process of gaining a new customer.

Understanding CAC is essential for evaluating the efficiency of marketing strategies and the overall sustainability of a business model. If the cost of acquiring a customer exceeds the revenue generated from that customer, it indicates that the business may struggle to be profitable in the long run. Therefore, tracking and optimizing CAC allows businesses to refine their marketing strategies, improve profitability, and scale effectively.