Customer Acquisition Cost [CAC]

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The total cost to a business for acquiring a new customer. The CAC can be used to help understand if there’s a positive return on the investments being made to attract new customers. CAC can also be measured against a customer’s LTV in order to determine if the CAC is worth it relative to that customer’s subsequent purchases. Some of the factors that are included in the cost range from direct marketing expenses (ads, keywords, etc.) to salaries for sales/marketing teams to affiliate marketing fees.