CAC (Customer Acquisition Cost)

What is a CAC (Customer Acquisition Cost)?

Formula: Total Sales & Marketing Costs / Number of New Customers Acquired

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Measures how much a company spends to acquire each new customer, including advertising costs, salaries of sales and marketing teams, tools and software, and other related expenses. For example, if a SaaS company spends $100,000 on marketing and sales in a month and acquires 200 new customers, their CAC is $500. Companies like Netflix and Amazon closely monitor CAC to ensure profitable growth. A rising CAC might indicate market saturation or inefficient marketing strategies.

How do you optimize CAC?

Optimize CAC through targeted marketing, efficient sales processes, and conversion rate optimization. Focus on channel effectiveness, lead quality, and sales cycle efficiency to reduce acquisition costs.

What's a good CAC ratio?

Good CAC ratios vary by industry, but generally aim for CAC payback periods under 12 months. Compare CAC to customer lifetime value (CLV) to ensure profitable customer acquisition.

How do you measure CAC accurately?

Measure CAC by tracking all acquisition costs including marketing, sales, and overhead expenses. Include both direct and indirect costs for comprehensive CAC calculation.

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Who is this for?

My services will turn on a tap of consistent flowing leads but it’s not for everyone. We’re likely a fit for each other if you’re:

A SaaS businesses that need more customers

If your SaaS company needs qualified users who are ready to become paying subscribers, I can optimize your Google Ads to deliver consistent leads.

Turning over of at least $20k/mth in revenue

I’ll use Google Ads to pour fuel on the fire. We need to know you have product market fit to be confident that you have a service that people are going to buy.

Have a strong retention rate

New users are great but we need to know that they will stay long enough to generate profit from their LTV.

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