What does CAC stand for in marketing metrics?

• A. Customer Acquisition Cost
• B. Customer Approved Conversion
• C. Cost per Active Customer
• D. Consistent Ad Conversion

Answer: (A)

Customer Acquisition Cost is the metric that tells you how much you spend to bring in a new customer. It’s calculated by dividing total sales and marketing expenses in a period by the number of new customers acquired in that same period. For example, if you spend $40,000 on marketing and $10,000 on sales and gain 500 new customers, CAC is $100 per customer. This figure helps you judge how efficient your marketing and sales efforts are and is most meaningful when compared to how much those customers are worth over their lifetime (LTV). If CAC is higher than LTV, growth may not be sustainable; if CAC is lower, you have potential for profitable scale. CAC can be tracked overall or broken down by channel or campaign. Other phrases like “Cost per Active Customer” or “Ad Conversion” describe different ideas and aren’t the standard meaning of CAC.