Customer Acquisition Cost (CAC) measures the total expense a company incurs to acquire a new customer, including marketing, sales, and other related costs. CAC is key to understanding the profitability and scalability of customer acquisition efforts.
Why It Matters: Knowing your CAC helps you gauge the efficiency of your marketing and sales strategies. Lowering CAC can improve profit margins and enable faster growth, especially when combined with high customer lifetime value (CLTV).
Strategies to Improve CAC: Optimizing marketing channels, refining targeting efforts, and enhancing conversion rates can all contribute to reducing CAC.
Why is CAC important for startups?
CAC helps startups track spending efficiency on customer acquisition. Lowering CAC supports profitability and growth.
What is a good CAC?
A good CAC varies by industry but should ideally be balanced with high customer lifetime value (CLTV) for sustainable growth.
How can a startup reduce CAC?
Improving targeting, optimizing ad spend, and focusing on organic growth strategies can reduce CAC effectively.
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